by Calculated Risk on 6/12/2007 09:27:00 AM

From the WSJ: For Troubled Firms, A Flood of Big Loans

In a world awash in investable funds, even many of the most troubled companies are finding lenders willing to offer them big money. This rescue financing, as it's sometimes called, can give companies time to clean up their balance sheets and avoid a trip to bankruptcy court. U.S. filings for bankruptcy reorganization ... are at a 10-year low. Also at historic lows are U.S. corporations' debt defaults.
..
It ... can be risky to have so much debt sloshing around the economy's shakier regions. When rescue lending fails, the extra debt can make a bust just more spectacular. Among lenders that risk taking it on the chin are some hedge funds, which have largely replaced banks as lenders in this kind of finance.

See the story for some nice graphs of the rapid increase in speculative grade loans.