Latest ABI Podcast Examines Puerto Rico's Financial Future Under PROMESA Oversight Board
ABI Executive Director Sam Gerdano talks with John E. Mudd, an attorney and respected legal commentator in Puerto Rico who has closely followed the territory's debt crisis. He provides insight on the Financial Control Board created by the “Puerto Rico Oversight, Management, and Economic Stability Act” (PROMESA).
Analysis: How "Zombie" Oil Companies Stay Alive in Life-or-Death Debt Markets
Beneath the surge in corporate defaults lies a surge in distressed exchanges, and the trend is most apparent in the energy sector, where oil and gas companies have been deploying creative measures to stay afloat amid lower crude prices that have crimped profits and threatened their survival, Bloomberg News reported yesterday. Such measures have included swapping unsecured debt for secured, offering discounted buybacks of existing debt, or junior-lien debt that gets paid after other creditors. "While these [distressed exchanges] do result in some level of loss to bondholders, unlike missed payments and bankruptcy filings the bonds typically remain eligible for inclusion in the high-yield index," Kai Gilkes and Anneli Lefranc, analysts at CreditSights Inc., wrote in new research. They note that the 12-month default rate rose to 7.2 percent for U.S. junk-rated bonds in August. That's an
increase of 30 basis points compared to July's default rate of 6.9 percent, spurred on by six corporate defaults last month — including a trio of U.S. energy companies. "Distressed exchanges have contributed greatly to the rise in default rates," they add, with 38 of the 75 U.S. high-yield defaults over the last 12 months coming from such deals.
August Retail Sales Drop, As Do Experts' Hopes for Third-Quarter Rebound
Retail sales overall fell 0.3 percent in August from July, seasonally adjusted, representing the first outright drop in sales since March, the Wall Street Journal reported today. Excluding both autos and gas, sales were down 0.1 percent. From a year ago, sales were up 1.9 percent, down from July’s 2.4 percent pace. The numbers suggest, economist Steve Murphy at Capital Economics wrote, that third-quarter real consumption growth will probably be between 2.5 and 3 percent. “Overall, the August retail sales report confirms our suspicions that third-quarter GDP growth will probably come in softer than we initially expected,” he said. The firm still projects third-quarter GDP at 2.5 percent, but cautioned that “the balance of risks to that forecast now probably lie to the downside.”
Sen. Warren Questions Whether Wells Fargo Heads Should Keep Jobs
Sen. Elizabeth Warren (D-Mass.) questioned whether Wells Fargo & Co. Chairman and Chief Executive Officer John Stumpf should keep his job amid allegations that the bank opened millions of accounts without customers’ knowledge, Bloomberg News reported today. “He needs to be held accountable, as does the rest of his senior management,” Warren said today. “You should not be able to keep your job and keep raking in millions of dollars in bonuses." Wells Fargo last week agreed to pay $185 million to the Consumer Financial Protection Bureau and other regulators to resolve claims that employees opened more than 2 million accounts that consumers may not have known about. U.S. attorneys in New York and San Francisco have opened criminal inquiries, a person familiar with the matter said, adding that under Justice Department guidelines, investigators will look into both potential
corporate and individual wrongdoing.
Sign up Today to Receive Rochelle’s Daily Wire by E-mail!
Have you signed up for Rochelle’s Daily Wire in the ABI Newsroom? Receive Bill Rochelle’s exclusive perspectives and analyses of important case decisions via e-mail!
New on ABI’s Bankruptcy Blog Exchange: Fed Becomes Latest Cheerleader for Glass-Steagall-Like Reform
New recommendations by the Federal Reserve Board are a crucial step in the direction of a much-needed restructuring of the U.S. financial sector, according to a recent blog post.
To read more on this blog and all others on the ABI Blog Exchange, please click here.
