One measure of debt-market distress is down 90% since March amid Fed assistance and easy money

• The US distress ratio is down 90% since last year as Fed assistance and fiscal policy stabilizes borrowing conditions.
• The ratio measures the proportion of distressed securities relative to US Treasuries.
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A ratio that measures the levels of debt-market distress is down nearly 90% since March 2020 as continued support from the Federal Reserve and fiscal policy help stabilize borrowing conditions.

The US distress ratio - the proportion of speculative-grade (rated "BB+" or lower) issues with option-adjusted composite spreads of more than 1,000 basis points relative to U.S. Treasuries - continued to trend down in February 2021, hitting 4.0% after peaking at 35.2% just 11 months earlier, according to a report from S&P Global.

That's the lowest level in almost 10 years as the number of securities at higher risk of default comes down.

"We expect the U.S. distress ratio to remain relatively stable in the near term, although risks remain, including the possibility of further waves in the COVID-19 virus, which may lead to additional economic lockdowns," said researchers from S&P Global led by Nicole Serino. "Additionally, Treasury yields have been steadily rising, which so far has had little effect on credit markets but may put additional liquidity pressure on speculative-grade issuers."

On a sector level, oil and gas companies have the highest distress ratio at 14.3%, thogh that is down considerably since a high of 93% roughly one year ago.