The pandemic has severely impacted the global economy and financial risk profile of many corporate debt issuers. KBRA believes the slowdown in economic activity will translate into the lowest growth in global GDP in over 30 years, as world economies deal with shuttered businesses and regional quarantines.
The impact of these aggressive population isolation strategies will be widespread, and many companies could experience financial distress. Some companies have already started to plan for the slowdown by drawing on unused bank lines and revolvers. This seems to be a prudent strategy given the current market landscape, as it allows these companies to deal with short-term liquidity issues. However, this may increase the debt burden of these companies, which could result in higher default risk over the longer term as debt service obligations increase. The daily ramifications of the virus are ever-changing, with the seemingly outsized reactions throughout the global capital markets.
While it is impossible to forecast when and how the current situation will be resolved, there are certain data points that may provide an early indication of the health of the corporate debt market and individual issuers.
To view the report, click here.
CONNECT WITH KBRA
About KBRA and KBRA Europe
KBRA is a full-service credit rating agency registered with the
View source version on businesswire.com: https://www.businesswire.com/news/home/20200319005451/en/
Analytical:
+1 (646) 731-2485
sschutzman@kbra.com
+1 (646) 731-3317
mcolella@kbra.com
+1 (646) 731-3329
agracely@kbra.com
+1 (646) 731-2372
agiudici@kbra.com
Business Development:
+1 (646) 731-2442
jlilien@kbra.com
Source:
New York Stock Exchange To Close Trading Floor Indefinitely Monday
Agency Information Collection Activities: Submission for OMB Review; Comment Request; FEMA Preparedness Grants: Homeland Security Grant Program (HSGP)
More Articles