How Dangerous Is All This Debt?
Bloomberg Businessweek|June 17, 2019

Loans to financially weak companies are booming, and regulators may be in the dark.

Sally Bakewell and Thomas Beardsworth
How Dangerous Is All This Debt?

There’s been a steady drumbeat of warnings about a surge in risky corporate borrowing—but not much clarity about how serious the threat is. At issue is the more than $1 trillion market in leveraged loans. That’s Wall Street jargon for high-interest loans to business with less than rock-solid finances. Federal Reserve and European Central Bank officials have drawn attention to the rise in corporate debt and the deterioration of lending standards. The loans are often bundled into securities known as collateralized loan obligations (CLOs).

Most of the watchdogs are careful to say a repeat of the 2007-2008 crisis is unlikely because most of the debt isn’t held by banks. But that creates another problem: Regulators focused on banks are largely in the dark when it comes to pinpointing where the risks lie and how they might ripple through the financial system when the economy turns down. A big worry is that over-indebted businesses could face severe stress and, in some cases, insolvency, threatening jobs and deepening the next downturn. “I always remind myself that even the smartest policymaker with the most far-reaching perspective, data, and tools was basically blindsided by the breadth and depth of the housing crisis,” says Mark Spindel, chief investment officer at Potomac River Capital. “Leveraged loans and corporate debt are not housing, but maybe it’s more pervasive than we think.”

هذه القصة مأخوذة من طبعة June 17, 2019 من Bloomberg Businessweek.

ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.

هذه القصة مأخوذة من طبعة June 17, 2019 من Bloomberg Businessweek.

ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.

المزيد من القصص من BLOOMBERG BUSINESSWEEK مشاهدة الكل
Instagram's Founders Say It's Time for a New Social App
Bloomberg Businessweek US

Instagram's Founders Say It's Time for a New Social App

The rise of AI and the fall of Twitter could create opportunities for upstarts

time-read
4 mins  |
March 13, 2023
Running in Circles
Bloomberg Businessweek US

Running in Circles

A subscription running shoe program aims to fight footwear waste

time-read
3 mins  |
March 20 - 27, 2023
What I Learned Working at a Hawaiien Mega-Resort
Bloomberg Businessweek US

What I Learned Working at a Hawaiien Mega-Resort

Nine wild secrets from the staff at Turtle Bay, who have to manage everyone from haughty honeymooners to go-go-dancing golfers.

time-read
10 mins  |
March 20 - 27, 2023
How Noma Will Blossom In Kyoto
Bloomberg Businessweek US

How Noma Will Blossom In Kyoto

The best restaurant in the world just began its second pop-up in Japan. Here's what's cooking

time-read
3 mins  |
March 20 - 27, 2023
The Last-Mover Problem
Bloomberg Businessweek US

The Last-Mover Problem

A startup called Sennder is trying to bring an extremely tech-resistant industry into the age of apps

time-read
10+ mins  |
March 20 - 27, 2023
Tick Tock, TikTok
Bloomberg Businessweek US

Tick Tock, TikTok

The US thinks the Chinese-owned social media app is a major national security risk. TikTok is running out of ways to avoid a ban

time-read
10+ mins  |
March 20 - 27, 2023
Cleaner Clothing Dye, Made From Bacteria
Bloomberg Businessweek US

Cleaner Clothing Dye, Made From Bacteria

A UK company produces colors with less water than conventional methods and no toxic chemicals

time-read
3 mins  |
March 20 - 27, 2023
Pumping Heat in Hamburg
Bloomberg Businessweek US

Pumping Heat in Hamburg

The German port city plans to store hot water underground and bring it up to heat homes in the winter

time-read
3 mins  |
March 20 - 27, 2023
Sustainability: Calamari's Climate Edge
Bloomberg Businessweek US

Sustainability: Calamari's Climate Edge

Squid's ability to flourish in warmer waters makes it fitting for a diet for the changing environment

time-read
4 mins  |
March 20 - 27, 2023
New Money, New Problems
Bloomberg Businessweek US

New Money, New Problems

In Naples, an influx of wealthy is displacing out-of-towners lower-income workers

time-read
4 mins  |
March 20 - 27, 2023