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Illustration: Sarah Grillo/Axios

Even with trillions of dollars in loans, grants and government support — with markets having absorbed a record $1.22 trillion of corporate debt in just five months — a slew of companies are defaulting on their loans and filing for bankruptcy in what is expected to be a record wave of insolvencies and defaults.

Why it matters: While equity and debt markets have rallied thanks to massive interventions from the Federal Reserve and Congress and excitement about the removal of lockdown orders, the real economy is quietly buckling, with many companies threatened by issues that predate the coronavirus pandemic.

What's happening: So far this month, 27 firms that report at least $50 million in liabilities have sought bankruptcy protection, Bloomberg reports.

  • That's the highest monthly total since May 2009.

Stay woke: "As we have seen in previous times of economic stress, companies facing unforeseen financial burdens do not immediately resort to bankruptcy," Sudeep Kesh, head of S&P Global credit market research, says in a new report.

  • "The majority of bankruptcy defaults we have seen so far in the second quarter of 2020 were at companies that were facing idiosyncratic challenges before the COVID-19 and oil price shock."

What to watch: Already this year, 88 companies globally have defaulted on their debt, according to S&P Global. That's nearly double the number of corporate defaults to this point in 2019 (49) and more than double 2018's total (43).

  • Of the 88 defaults, 59 have been the result of missed interest and principal payments or bankruptcy.

What's next: Distressed debt investors and law firms are gearing up for the onslaught of bankruptcies, insolvencies and liquidations expected this year, with legal scholars warning congressional leaders in a recent letter that federal bankruptcy courts are likely to "be overwhelmed by this flood of cases."

  • Centerbridge Partners recently activated a roughly $3 billion capital pool that had been on standby for four years to direct at distressed assets, the firm's co-managing partner Jeffrey Aronson told the Wall Street Journal.

The last word: “You have to recognize that this recession, as tough as it is, has just started,” Aronson said.

Go deeper

U.S. debt to reach 100% of GDP in 2021

Photo: Stefani Reynolds/Getty Images

The federal budget deficit will reach $3.3 trillion in the fiscal year ending this month — more than triple the 2019 shortfall, the nonpartisan Congressional Budget Office (CBO) projected on Wednesday.

Why it matters: That would be 16% of GDP, the largest amount since the end of World War II in 1945. The national debt is projected to exceed 100% of GDP in 2021 and rise to 107% in 2023 — "the highest in the nation's history," the CBO notes.

Students vandalize and steal from schools for viral TikTok challenge

TikTok logo displayed on a phone screen in Krakow, Poland on July 18, 2021. Photo: Jakub Porzycki/NurPhoto via Getty Images

A viral TikTok challenge is leading students nationwide to shatter mirrors, steal fire alarms and intentionally clog toilets, The Washington Post reports.

Driving the news: Dubbed the the “Devious Licks challenge, students are showing off their "devious licks" on TikTok — with a sped-up version of "Ski Ski BasedGod" by rapper Lil’ B playing in the background.

Axios-Ipsos poll: People of color face more environmental threats

Expand chart
Data: Axios/Ipsos poll; Note: ±2.5% margin of error; Chart: Sara Wise/Axios

Americans of color are much less likely than white Americans to experience good air quality or tap water or enough trees or green space in their communities, and they're more likely to face noise pollution and litter, a new Axios-Ipsos poll finds.

The big picture: Our national survey shows Black and Hispanic Americans are more likely than their white counterparts to live near major highways or industrial or manufacturing plants — and to have dealt in the past year with water-boil notices or power outages lasting more than 24 hours.