{"id":54909,"date":"2020-09-06T07:19:31","date_gmt":"2020-09-06T12:19:31","guid":{"rendered":"https:\/\/olduvai.ca\/?p=54909"},"modified":"2020-09-06T07:19:56","modified_gmt":"2020-09-06T12:19:56","slug":"54909","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=54909","title":{"rendered":"An Unlikely Sector Leads the Way in Surge of Corporate Leveraged Loan Defaults"},"content":{"rendered":"
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An Unlikely Sector Leads the Way in Surge of Corporate Leveraged Loan Defaults<\/a><\/h1>\n<\/div>\n<\/div>\n<\/section>\n
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\"oil<\/p>\n

From\u00a0Birch Gold Group<\/a><\/em><\/p>\n

The economic effects of the COVID-19\u00a0pandemic<\/a>\u00a0and recent\u00a0Fed<\/a>\u00a0monetary<\/a>\u00a0policy<\/a>\u00a0continue to reveal themselves.<\/p>\n

The latest \u201creveal\u201d that\u2019s taking center stage is risky corporate leveraged loans, with defaults soaring to their highest levels since 2010 by issuer count, and since 2015 by rate.<\/p>\n

A\u00a0report<\/a>\u00a0by S&P Global Intelligence breaks everything down, starting with a summary:<\/p>\n

U.S. loan defaults continued to rise in July, surpassing 4% by issuer count for the first time since 2010, after five constituents of the S&P\/LSTA Leveraged Loan Index tripped defaults on $7.7 billion of term loans.<\/p><\/blockquote>\n

You can see the billions in defaults by year in the chart below, and how the U.S. hasn\u2019t seen an amount even close since 2009 (with four months still remaining in 2020):<\/p>\n

\"us<\/p>\n

\u201cWith economic fallout from the coronavirus pandemic playing an increasing role, default volume over the last 12 months, at $46.35 billion,\u00a0outpaces the same period of 2019 by 233%<\/strong>,\u201d according to the same report.<\/p>\n

Even more sobering than this astonishing surge, it looks like a critical sector of the economy that shouldn\u2019t be defaulting on leveraged loans is the sector that\u2019s contributing the\u00a0most<\/em>\u00a0defaults\u2026<\/p>\n

Oil and Gas Companies Reveal How Fragile the Situation Is<\/strong><\/p>\n

It appears things wouldn\u2019t be \u201cso\u201d bad if oil and gas companies weren\u2019t defaulting\u00a0by more than 30%<\/strong>\u00a0of their total loan amount. You can see their \u201ccontribution\u201d to this dire situation reflected in the chart below:<\/p>\n

\"us<\/p>\n

You can also see how oil and gas leveraged loan defaults could also have played a role in the dramatic Dow crash at the\u00a0end of 2018<\/a>\u00a0in the same chart above.<\/p>\n

The S&P Global report notes that some examples of the energy sector carnage\u00a0include<\/a>\u00a0(but are by no means limited to):<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n

 <\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

An Unlikely Sector Leads the Way in Surge of Corporate Leveraged Loan Defaults From\u00a0Birch Gold Group The economic effects of the COVID-19\u00a0pandemic\u00a0and recent\u00a0Fed\u00a0monetary\u00a0policy\u00a0continue to reveal themselves. The latest \u201creveal\u201d that\u2019s taking center stage is risky corporate leveraged loans, with defaults soaring to their highest levels since 2010 by issuer count, and since 2015 by rate. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[18769,30255,303,30254,1774,534,3650,855],"class_list":["post-54909","post","type-post","status-publish","format-standard","hentry","category-economics","tag-birch-gold-group","tag-corporate-loans","tag-fed","tag-leveraged-loan-defaults","tag-leveraged-loans","tag-monetary-policy","tag-us-federal-reserve","tag-viral-pandemic"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/54909","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=54909"}],"version-history":[{"count":3,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/54909\/revisions"}],"predecessor-version":[{"id":54912,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/54909\/revisions\/54912"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=54909"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=54909"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=54909"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}