Bankruptcies spurred by the COVID-19 crisis could erase $1 trillion from global corporate debt markets

• The Bank for International Settlements in an analysis estimates $1 trillion of credit losses stemming from corporate bankruptcies worldwide. 
• The recreation sector and customer-services industries are being hit the hardest by insolvencies.
• The UK faces the biggest credit losses on a country basis, according to the institution’s report. 
• Visit the Business section of Insider for more stories.
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Bankruptcies stemming from COVID-19 health crisis could erase up to $1 trillion from corporate credit markets worldwide, according to the Bank for International Settlements.

The recreation sector and other customer services industries are being hit the hardest by insolvencies, said the financial institution that serves central banks as part of a wider quarterly review published Monday. The recreation industry accounted for 1.5%-8% of non-financial corporate credit in the countries in its sample.

While non-financial corporate bankruptcy rates remain fairly low in most countries despite declines in economic activity “they are expected to rise as measures to support credit are wound back, new consumption habits and business practices accelerate the downsizing of specific sectors, and some firms run out of liquidity,” said BIS.

It added: “The looming increase in corporate bankruptcies will generate credit losses that will need to be absorbed, either by the financial system or by taxpayers.”

Businesses within the customer service industries have been hit particularly hard because measures aimed at reducing the spread of the coronavirus have forced the temporary, or in some cases, permanent closure of such businesses. A pullback in consumer discretionary purchases has also contributed to hardships for consumer-oriented businesses.

The so-called bank of banks also said the estimated increase in credit losses is largest in the UK, then in Italy and France, “in line more adverse GDP paths and their high share of severely impacted sectors,” while China’s increase in credit losses is the most contained, it said.

Cumulated over the 2020 through 2022 period, the increases in pandemic-induced credit losses amount to between 0.7% of China’s annual gross domestic product and 5.1% in the United Kingdom.

Separately, S&P Global Market Intelligence recently said US bankruptcies in 2020 reached a record 630 filings. Looking at 2021, the pace of corporate bankruptcies in the US through mid-February slowed compared with the same period in 2020, according to recent figures from There were 63 filings as of February 15 compared to 80 a year earlier.

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