Credit risk by sector

Bed Bath & Beyond shares tumbled when the company disclosed last week that it’s in default on loans and doesn’t have money to repay its bankers.

The home-goods chain is far from the only company in financial distress, as some indicators of a possible recession light up.

A new report from S&P Global Market Intelligence says the risk of default rose in late 2022 for three U.S. sectors that were already showing signs of vulnerability: health care, communication services and real estate.

Sectors at the other end of the risk spectrum include utilities, financials such as banks, and industrials.

In fact, what might be most surprising about the S&P report is that it found many more sectors where the risk of default is dropping. That’s even as other signs — including a decline in consumer spending and a sharp drop in The Conference Board’s “leading economic index” — point to a possible recession.

For Bed Bath & Beyond, which already said it was considering a bankruptcy filing, the immediate impact of default notices will be a hike in interest rates and the need to put up cash collateral for letters of credit, according to a regulatory filing.