Corporate debt loads a rising risk as coronavirus hits economy
4 years, 9 months ago

Corporate debt loads a rising risk as coronavirus hits economy

India TV News  

A gyrating stock market is seizing headlines as the coronavirus threatens corporate profits and economic growth. Oxford Economics has warned that nearly $4 trillion of U.S. corporate bonds will come due within five years — a “massive wall of maturities,” it calls it. “High debt levels make the corporate sector in key economies, including the U.S., particularly vulnerable to the sharp slowdown in global economic activity,” said Eswar Prasad, a former top economist at the International Monetary Fund official who teaches at Cornell University. On Wall Street, the corporate bond market turned chaotic this week when a standoff between Saudi Arabia and Russia sent oil prices plunging 25% Monday, the biggest drop since the 1991 Persian Gulf War. "I’ve never seen anything like this in 30 years of trading," said John Dixon, who trades junk bonds at Dinosaur Financial Group.

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History of this topic

As Bond Market Turbulence Eases, Companies Borrow Again
1 year, 8 months ago

As Bond Market Turbulence Eases, Companies Borrow Again

Live Mint  

Trading in U.S. government bonds has become much less volatile in recent weeks, helping fuel a rebound in corporate borrowing after a chaotic stretch that followed Silicon Valley Bank’s collapse in early March. Daily moves in the 2-year Treasury yield averaged 0.22 percentage point from March 9, when the run on SVB started, through March 27, the day that the …

A top mutual fund manager is turning bullish on riskier Indian debt
3 years, 11 months ago

A top mutual fund manager is turning bullish on riskier Indian debt

Live Mint  

One of India’s top fund managers is turning bullish on higher-yielding rupee corporate bonds based on the view that the nation’s recovery will outpace the consensus estimate of economists. Maneesh Dangi, who oversees $25 billion of debt assets at Aditya Birla Sun Life AMC Ltd., expects India’s economy to expand by 13% in the fiscal year starting April, compared with …

Here’s what could really sink the global economy: $19 trillion in risky corporate debt
4 years, 9 months ago

Here’s what could really sink the global economy: $19 trillion in risky corporate debt

CNN  

London CNN Business — Companies have spent the years since the global financial crisis binging on debt. “This certainly is another match being lit the bonfire of corporate debt liabilities,” said Simon MacAdam, global economist at Capital Economics. “There’s definitely potential for systemic risk.” The coronavirus shock Investors became increasingly anxious about corporate debt this week as stocks sold off …

Coronavirus shook the foundations of a global stock market powered by debt
4 years, 10 months ago

Coronavirus shook the foundations of a global stock market powered by debt

ABC  

The news over the weekend was nothing short of grim. While western governments are sheeting home the blame for last week's market carnage on the virus, a much more sinister and barely concealed problem lurks at the heart of our financial system. Last October the International Monetary Fund warned that up to $US19 trillion of corporate debt could be "at …

Latest headache for Indian firms: Sluggish bond market
4 years, 11 months ago

Latest headache for Indian firms: Sluggish bond market

Live Mint  

India needs a bigger bond market now more than ever, to help get funds to cash-strapped companies cut off from their shadow lenders by a crisis in that sector. Rupee corporate bond issuance seen increasing little in 2020 A stalling in issuance also undercuts attempts by Finance Minister Nirmala Sitharaman and predecessors to expand India’s corporate bond market to better …

Way out for a debt-laden world? Yet more debt
5 years, 1 month ago

Way out for a debt-laden world? Yet more debt

Live Mint  

Zombie companies in China. “Previous conventional wisdom about advanced economy speed limits regarding debt to GDP ratios may be changing,” said Mark Sobel, a former US Treasury and International Monetary Fund official. “Given lower interest bills and markets’ pent-up demand for safe assets, major advanced economies may well be able to sustain higher debt loads.” A constraint for policy makers, …

Corporate debt is rising, but it’s safer than it looks
5 years, 6 months ago

Corporate debt is rising, but it’s safer than it looks

CNN  

Editor’s Note: Daan Struyven is a senior economist in the US Economics research group at Goldman Sachs in New York. And corporate debt has actually trended lower relative to corporate assets since the mid-90s.The lower debt-to-cash flow and debt-to-assets measures are more meaningful than debt-to-GDP, as they better capture the risks of bankruptcy and illiquidity. Most importantly, the large decline …

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