Over a decade of artificially suppressed interest rates sustained countless enterprises incapable of generating genuine economic profit. Abundant cheap capital obscured operational inefficiency, flawed business models and chronic cash-flow deficits.
The return of positive real rates has brought a long-overdue conclusion to the era of credit-dependent "zombie" companies. Capital once again commands a real price, and corporate leverage represents an unforgiving operational claim. Business models reliant on rolling over cheap debt now face the unyielding discipline of cash-flow coverage.
While market cleansing introduces short-term friction, it restores essential systemic health. Well-governed enterprises built on authentic margins and disciplined leverage are finally positioned to capture market share from debt-dependent competitors.