US debt investors have raised the alarm over lax lending standards in credit markets after the unravelling of two companies that just weeks ago were deemed to be in strong health.
The failure of subprime auto lender Tricolor Holdings at the start of this month followed by the exploration of bankruptcy proceedings by car parts supplier First Brands Group have wrongfooted investors. Tricolor had won pristine triple-A ratings as it borrowed in credit markets, while First Brands may have amassed as much as $10bn in debt and off-balance sheet financing and was close to raising even more last month.
Investors were ready to dismiss each as one-off incidents, but taken together, the two offer signs of cracks within credit markets, which have become a critical source of funding for consumers and businesses as traditional banks have retreated since the financial crisis.
US debt investors have raised the alarm over lax lending standards in credit markets after the unravelling of subprime auto lender Tricolor Holdings and car parts supplier First Brands Group that just weeks ago were deemed to be in strong health. https://t.co/42lt425W6Y pic.twitter.com/MIgeF7QhsF
— Financial Times (@FT) September 24, 2025