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Economy
Related: About this forumUS Commercial Bankruptcies Suddenly Soar
US Commercial Bankruptcies Suddenly Soar
by Wolf Richter April 11, 2016
[font color="blue"]Leaving ugly skid marks on the economy, banks, and investors.[/font]
The end of the credit cycle is a harmless-sounding moniker for an era when defaults and bankruptcies suddenly re-materialize, as if out of nowhere, and when investors get to eat big losses in what they thought were conservative investments.
Its when new money for Corporate America gets a little more skittish, and credit just a little tighter not all at once, but over time. And for over-indebted junk-rated companies, that slight tightening and the accompanying rise in rates at the top triggers liquidity crises, defaults, and bankruptcies at the bottom.
Ratings agencies have responded to the end of the credit cycle by downgrading companies in a relentless tango. With each downgrade, credit tightens just a bit more for these companies, causing additional risks and operational difficulties. As liquidity dries up for them, they slash investments and cut costs, which wipes out the hope for growth the essential ingredient that kept the illusion alive.
In that vein, Standard & Poors reported that it downgraded 44 US junk-rated companies in March, while upgrading just 15. This comes on top of the 82 issuers it downgraded in February. In the first quarter, about 45% of S&Ps downgrades hit oil & gas companies. Not a surprise, given the state the industry is in. But 55% of the downgrades hit companies outside oil & gas! .................(more)
http://wolfstreet.com/2016/04/11/us-commercial-bankruptcies-chapter-11-soar/
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US Commercial Bankruptcies Suddenly Soar (Original Post)
marmar
Apr 2016
OP
2naSalit
(86,646 posts)1. They are dumping assets
so they can bail on the coming changes in our economic structure - planned or not - so they can keep their offshore booty in tact.
elleng
(130,972 posts)3. F*ck the 'rating agencies!'