Business Maverick: Asset Bubbles to Zombie Companies: The Dark Side of Rate Cuts

  • 📰 dailymaverick
  • ⏱ Reading Time:
  • 64 sec. here
  • 3 min. at publisher
  • 📊 Quality Score:
  • News: 29%
  • Publisher: 84%

Brasil Notícia Notícia

Brasil Últimas Notícias,Brasil Manchetes

Business Maverick: Asset Bubbles to Zombie Companies: The Dark Side of Rate Cuts By Bloomberg

The U.S. Federal Reserve and fellow central banks are only trying to support economic growth and spur inflation. But their embrace of lower interest rates may pump up the price of assets that are already richly valued, or stoke demand for higher yields that come with elevated risks.

So where are the potential naked swimmers? Here are some asset classes that are already attracting scrutiny:Few markets draw more concern than leveraged loans, used by typically junk-rated companies to fund everything from private equity buyouts to shareholder dividends. With so much money chasing a limited supply of debt, companies have been able to borrow at cheaper rates and extract generous concessions, eroding the checks and balances that protect creditors. In fact, so-called covenant-lite loans now make up a majority of the debt issued in the market.The global yield hunt has also spilled over into markets that were once the sole domain of banks — in particular, lending to small and medium-sized businesses that typically can’t access capital markets.

Italy saw the yield on its two-year bonds slip into negative territory earlier this month and the 10-year bond yield has been halved from over 3% earlier this year. While political risks have abated in both of these countries, they still carry a huge debt burden that has spooked investors in the past, as seen in a spike in Italian yields in May last year as liquidity evaporated.Even some junk bonds now trade at levels where investors have to pay for the privilege of holding them.

 

Obrigado pelo seu comentário. Seu comentário será publicado após ser revisado.
Resumimos esta notícia para que você possa lê-la rapidamente. Se você se interessou pela notícia, pode ler o texto completo aqui. Consulte Mais informação:

 /  🏆 3. in BR

Brasil Últimas Notícias, Brasil Manchetes

Similar News:Você também pode ler notícias semelhantes a esta que coletamos de outras fontes de notícias.

Business Maverick: U.K. Starts No-Deal Brexit Meetings as It’s Now a Real ProspectU.K. Prime Minister Boris Johnson’s high-level Brexit cabinet holds its first meeting Monday, and will gather every day to ensure the country leaves the European Union on Oct. 31.
Fonte: dailymaverick - 🏆 3. / 84 Consulte Mais informação »

BUSINESS MAVERICK: Anglo American is backAnglo American’s interim results announcement on July 24 promised to be a fairly prosaic affair. But two pivotal events changed that. A surprising $1-billion share buyback was announced. And then came the decision by Indian tycoon Anil Agarwal to unwind his looming financial scheme in which he bought control over 20% of the company. Agarwal made a huge fortune from the bet, but the real winner is Anglo.
Fonte: dailymaverick - 🏆 3. / 84 Consulte Mais informação »

Business Maverick: SA economy could be the winner if online gambling is legalisedOnly 40 casinos are legally licensed to operate in South Africa – the traditional kind, the brick and mortar type. All other casinos are considered outlaws – whether online and otherwise. But the black market doesn’t play by the rules. And its gamble is paying off, handsomely. DURITZ79 I struggle to see how taking more from the public is going to be a good thing, that said, a night at the casino can be fun
Fonte: dailymaverick - 🏆 3. / 84 Consulte Mais informação »