Post Archive

Май 2016

Corporate borrowing has ballooned by $2.8 trillion since 2009 Profit pinch puts companies in a more precarious position Consumers were the Achilles’ heel of the U.S. economy in the run-up to the last recession. This time, companies may play that role. Among the warning signs: rising debt, lagging profits and mounting defaults. While the financial vulnerabilities aren’t likely to lead to another downturn soon, economists say they point to potential potholes down the road for an expansion that’s approaching its seventh birthday. “Companies have been adding to their debt and their debt has been growing more rapidly than their profits,”

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Wealth management products are now investing in other WMPs Layered liabilities show parallels with U.S. before ’08 crisis The risk of a default chain reaction is looming over the $3.6 trillion market for wealth management products in China. WMPs, which traditionally funneled money from Chinese individuals into assets from corporate bonds to stocks and derivatives, are now increasingly investing in each other. Such holdings may have swelled to as much as 2.6 trillion yuan ($396 billion) last year, based on estimates from Autonomous Research this month. The trend has China watchers worried. For starters, it means that bad investments by

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Credit ratings suffer record deterioration, says Moody’s The financial outlook for Chinese companies is deteriorating at a record rate as a large debt overhang accumulated since the 2008 financial crisis and waning corporate profits presage an “extended period of sub-par economic growth”, according to Moody’s, the credit rating agency. The agency more than quadrupled the number of Chinese debt issuers it classified as having a “negative outlook bias” on their credit ratings at the end of the first quarter of this year, compared to the end of 2015. A negative bias includes both those companies with ratings on review for

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Government debt restructuring becomes routine as Greece, Puerto Rico show emptiness of ‘moral obligation’ to repay Less than three years after the governor of Puerto Rico called repayment of its debt a “moral obligation,” the U.S. territory is headed for the fourth-largest government default on record. Though markets have met the event with a shrug, that shouldn’t diminish the significance of the moment. It underlines how much the stigma about government default has faded. Investors would be wise to build this risk into their calculations when lending to governments from now on, especially since arithmetic suggests more defaults are on

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U.S. household borrowing nears precrisis peaks; global debt has already topped 2008 levels If current trends persist through the end of the year, U.S. households will owe as much as they did at the peak of borrowing in 2008. Global debt has already topped 2008 levels and keeps rising. That’s pretty astonishing so soon after debt-driven crises in the U.S. and Europe and endless worries about too much borrowing in Japan, China and emerging markets. But for all the hand-wringing, a near-term debt crisis is unlikely. Lower interest rates mean debt payments are far lower than they were before the

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More home-loan debt sends total borrowing to highest since ’09 Growth slows in auto loans, credit-card balances, student debt Increased mortgage borrowing was behind a 1.1 percent rise in U.S. household debt in the first quarter, with slowdowns in other areas such as credit-card balances and auto loans, according to the Federal Reserve Bank of New York. Total mortgage debt rose 1.5 percent from the final quarter of 2015 to $8.37 trillion, marking the highest level since the third quarter of 2011, according to the New York Fed’s quarterly report on household debt and credit, released Tuesday. Auto-loan debt rose

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