These vulnerabilities are likely to push up default rates over the next few years. Consider a study by the credit rating agency Moody's that analyzed the impact a federal funds rate of 5.25%-5.50% would have on the interest coverage ratios 11 of more than 300 corporate issuers in the U.S. and Canada with credit ratings of B3 (the equivalent of B- at other rating agencies). Moody's projected that, in this scenario, the interest coverage ratios of 62% of these companies would fall below one by the end of 2023. 12 (See Figure 2.) In other words, these companies will owe more in interest than they'll be generating – a dynamic that will obviously lead to defaults if uncorrected.