According to new data from JPMorgan, distressed U.S. companies dramatically ramped up debt restructuring efforts in April 2025, marking a nearly 60% surge compared to the previous month.

These restructurings, known as distressed exchanges or liability management exercises, allow companies in financial trouble to renegotiate or reshape their debt in an attempt to avoid bankruptcy.

By the numbers, April saw $3.5 billion in distressed exchanges, up from $2.2 billion in March and $1.6 billion in February. Altogether, the first quarter of the year totaled $8.4 billion in such transactions.

Adding to the concern, the volume of bonds yielding over 1,000 basis points above U.S. Treasuries — a key marker of risk — jumped by $18.4 billion last month, reaching a 10-month high of $94.6 billion. This means about 7.2% of the U.S. junk bond market is now considered highly distressed, compared to 6.6% a year ago.

This sharp rise points to deepening financial challenges, as companies face mounting pressure from rising tariffs, stubborn inflation, and turbulent capital markets.

Winnie Cisar, global head of strategy at Credit Sights, cautioned that many companies are hoping they can turn things around after this period of turbulence — but warned that optimism could be “misplaced” in many cases.

Ian Feng, a senior analyst at Covenant Review, echoed those concerns, predicting the pace of debt restructurings will likely stay strong, especially if global trade tensions and regional conflicts continue to shake economic markets.

Meanwhile, Edward Best, co-head of the capital markets group at Willkie Farr & Gallagher, noted that these debt maneuvers typically buy companies one to two years to fix their underlying issues.

Reporting by Kate Moore.