Zombie Company

A firm that generates just enough revenue to service its debt and cover operating costs but cannot invest in growth, pay down principal, or survive a meaningful increase in interest rates. The era of ultra-low rates following the 2008 financial crisis allowed thousands of zombie companies to persist by continuously refinancing cheap debt. As central banks raised rates aggressively in 2022-2023, the viability of these firms came under intense scrutiny, and credit analysts warned of a wave of restructurings and defaults.