Weekly Wrap: GAO sees no systemic risk with CLOs
Deals, trends and research in structured finance and asset-backed securities for the week of Dec. 18-23
Commercial lending
Stimulus bill would give banks more flexibility on problem loans
The legislation would let banks postpone the start date of the Current Expected Credit Losses accounting standard and delay categorizing pandemic-related loan modifications as troubled debt restructurings.
Wall Street’s painful lessons from a year of epic debt fights
Bankruptcies reached levels not seen in a decade, distressed debt soared to almost $1 trillion and it may take years to repair the damage to airlines, restaurants and hotels. While 2020 may be over, the drama probably isn’t.
Citi trial puts banks on notice to make sure they’re not next
Win or lose, Citibank’s battle to recover half a billion dollars from an accidental payment is sure to prompt a review of internal controls in the industry and could have a lasting impact on the more than $1 trillion syndicated loan market.
Fresh off IPO, Upstart aims to push boundaries of AI-based lending
The online lender, which raised $240 million, wants to take its artificial intelligence technology for evaluating borrowers to the next level and expand its partnerships with banks, its CEO says.
Fast-tracked bankruptcies leave some creditors in the dark
Investment firms and hedge funds are increasingly engineering bankruptcy loans and side deals to take control of Chapter 11 reorganizations from the outset, locking in rich rewards for themselves while potentially locking out rivals and lower-ranking creditors with little transparency. The trend is sure to speed up cases, but it also forces judges to make quick decisions that may shortchange some valid claims.
Distressed investing’s ‘wall of money’ eyes 2021 opportunities
Promising vaccines may not reach the general public fast enough to save a number of struggling companies next year, and workout professionals and distressed investors are expecting smaller private companies will search for cash in 2021. They’re also anticipating that businesses of all sizes may struggle to adjust to changing consumer habits in a post-pandemic world.
Commercial lending push at Black-owned banks gets results
The architects of two major loan deals featuring Black banks, one involving multiple lenders and a pro sports franchise and another backed by Citigroup, say more transactions like these are in the works.
Funding for SBA-backed loan pools dries up
A program that lets firms bundle Small Business Administration loans is on hold while Congress spars over a new budget. The impasse is causing headaches for banks that rely on loan sales for fee income.
Bank error in your favor: Citi’s fight to reclaim $900 million
A trial to get underway this week over one of the biggest banking errors in recent memory will be closely watched on Wall Street, and its outcome could have a significant impact on the industry.
Hotel lending: Banks in ‘race against time’
Hospitality sector credits are coming out of forbearance just as coronavirus cases surge. Restructurings and charge-offs could mount unless vaccine distribution happens quickly enough to jump-start travel by mid-2021.
Fed to return lending-backstop funds to Treasury as requested
The move comes a day after the Federal Reserve had balked at the Treasury Department's demand that it return funds meant for pandemic relief that have so far gone unused.
Was reboot of this Fed crisis-relief program a bust?
The Term Asset-Backed Securities Loan Facility was brought back to inject $100 billion into the pandemic-battered economy, but only a fraction has been disbursed. Yet experts, pointing to its calming effects on markets, recommend that it be extended into next year.
Banks tighten standards on consumer, commercial loans
Demand trends were mixed in the third quarter, with consumers showing more willingness than businesses to take on new debt, according to the Fed’s most recent survey on bank lending practices.
Avalanche of loans may launch before holiday
After issuance dampened during the presidential election week, corporate bonds and loans are expected to roll out amid a large trove of post-election earnings reports.
Bankers talk around lending prospects, talk up need for stimulus
Executives from a half-dozen major financial institutions avoided detailed commercial lending forecasts and gave a mixed outlook on consumer credit at an industry conference. And they called on Washington to pass an aid package targeted at the most troubled business sectors as soon as it can.
Grace Building refi loan securitized in $750M SASB deal
Brookfield and JV partner Swig Co. are refinancing debt and cashing out $200M in equity in the iconic, sloped-base midtown Manhattan office tower.
By
Glen Fest
Mall shakeout just beginning as complex debt drowns owners
Rescuing malls will be unusually complicated because the properties have byzantine webs of financing that have only grown more elaborate with time.
S&P/LSTA index forecasts 8% loan-default rate into next year
Loan issuers in the hotel/leisure, oil and gas, retail and business equipment/services industries – which make up nearly a quarter of the S&P/LSTA Leveraged Loan Index – are expected to lead the default tally over the next 12 months, according to a report from S&P.
By
Glen Fest
Biden win would hammer distressed energy borrowers, FTI says
Bankruptcy filings hit a three-month high as investors brace for economic shifts from the U.S. election that could force more large corporations to seek protection from creditors.
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