Loading ...Moody’s cuts outlook on $6.6 trillion US corporate debt pile to ‘negative’
“Nonfinancial corporate debt totaled $6.6 trillion at the end of 2019, a +78% increase since the Great Recession ended in mid-2009. Low interest rates + easy financing terms helped fuel the boom. Investor protections known as covenants… all-time lows”
Moody’s Investors Service has cut its outlook for U.S. corporate debt from stable to negative.
The ratings agency said it made the move in response to deteriorating economic conditions that will weigh on consumer-sensitive companies.
Corporate debt issuance has boomed since the financial crisis, rising 78% since the recession ended…
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*WSJ
March 31Credit Hedge Fund Suspends Redemptions in Sign of Market Stress
Hedge fund EJF Capital LLC told clients it was suspending redemptions from one of its funds for the foreseeable future because it didn’t want to be a forced seller in what it called “dysfunctional” credit markets.
The $7 billion EJF, founded by Emanuel “Manny” Friedman, told clients in a letter Friday it was preventing investors from withdrawing their money from its Debt Opportunities Fund. That fund managed $2.5 billion at the end of February. While the fund received redemption requests totaling only 6% of its assets under…
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*Lisa Abramowicz
@lisaabramowicz1
“The Fed’s decision to buy corporate bonds has turned everyone into a buyer,” and yet net downgrades among IG bonds accelerated to $110 billion Monday from $91 billion Friday. “The pace of downgrades continues to accelerate from the record pace reached last week:” BofA research*Denmark will review its investment fund industry after some clients were prevented from redeeming their money.
*The U.S. Was Already Deep In Debt. This Year’s Deficit Will Be ‘Mind-Boggling’
“It’s mind-boggling. I never contemplated this,” says Douglas Holtz-Eakin, president of the American Action Forum, who headed the Congressional Budget Office under President George W. Bush.
“I can remember the quaint days when I was being yelled at because we had a $400 billion deficit and I was the CBO director. It doesn’t look so bad right now,” he says.
The economic rescue package approved by Congress and signed into law by President Trump contains $2 trillion in tax breaks and loan guarantees, throwing much-needed lifelines to troubled airlines, small businesses, hospitals, medical supply companies and municipal governments.
And more money will almost certainly be needed in the weeks to come, as the pandemic progresses.
“We are talking about massive amounts of money compared to anything we’ve ever done in this amount of time before,” says Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
At one time, such huge levels of deficit spending set off alarm bells in Washington, where politicians such as Senate Majority Leader Mitch McConnell routinely bemoaned the lack of fiscal discipline in government.
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