With the pandemic lockdowns starving many businesses of revenue, debt is becoming either the key to survival or a ticket to bankruptcy in corporate America. Companies strong enough to gain access to the bond markets have borrowed $1 trillion this year at the fastest pace on record. Then there are those that can’t afford to carry the debt they have, leading to the largest bankruptcy filings in the first five months of the year since 2009, during the Great Recession.
One of the first things the Federal Reserve did in response to the pandemic was pledge to buy investment-grade corporate bonds. Later it even said it would buy some of the highest-rated junk bonds. The effect was dramatic, reassuring bond investors and driving down interest rates even before purchases began. Funds that invest in U.S. investment-grade bonds, junk bonds, and leveraged loans saw a combined inflow of $13.8 billion in the week ended May 27, the largest on record, according to data from Refinitiv Lipper. That abundance of buyers has helped issuers such as Boeing Co. and Marriott International Inc. raise money to ride out the crisis.
“The Fed took a market that had no certainty and put as much certainty into it as they could,” says Elaine Stokes, a portfolio manager at Loomis Sayles & Co. “It almost becomes inevitable that there’s this crazy amount of demand.”
Bu hikaye Bloomberg Businessweek dergisinin June 08, 2020 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Giriş Yap
Bu hikaye Bloomberg Businessweek dergisinin June 08, 2020 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Giriş Yap
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
Running in Circles
A subscription running shoe program aims to fight footwear waste
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.
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
The Last-Mover Problem
A startup called Sennder is trying to bring an extremely tech-resistant industry into the age of apps
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
Cleaner Clothing Dye, Made From Bacteria
A UK company produces colors with less water than conventional methods and no toxic chemicals
Pumping Heat in Hamburg
The German port city plans to store hot water underground and bring it up to heat homes in the winter
Sustainability: Calamari's Climate Edge
Squid's ability to flourish in warmer waters makes it fitting for a diet for the changing environment
New Money, New Problems
In Naples, an influx of wealthy is displacing out-of-towners lower-income workers