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CC-Transcript

  • 00:00This has been an unprecedented year for corporate unraveling . Never before have so many retailers and health care companies gone bankrupt in such a short time. Every sector has gotten hit from the beaten down shale patch to airlines to sports leagues . Companies have put the blame for bankruptcy on the pandemic which is partly true but many were already fragile after taking on record amounts of debt during a decade of low interest rates . Hertz is a perfect example. The iconic rental car company filed for bankruptcy in May with revenues all but drying up as travel ground to a halt. But it also had failed to build a big enough cash cushion relative to its 24 billion dollars of debt purchase story is not unique. This may end up being the worst year for corporate defaults in history. The six biggest U.S. banks set aside 35 billion dollars in the second quarter alone to cover potential loan losses. The numbers would be far worse if policymakers hadn't fired a bazooka injecting trillions of dollars of fiscal and monetary support into the global economy . These measures have propped up markets and emboldened investors to plow into riskier securities. But all that hasn't been enough to offset the consequences of a recession. Companies are still struggling to survive with little income and ballooning debt after borrowing record amounts of cash to stay alive during the pandemic. Investment grade companies in the U.S. sold a staggering one point three trillion dollars of bonds in just the first half of the year exceeding all of last year's issuance by more than 65 billion dollars .
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How Coronavirus Sparked a Bankruptcy Crisis

July 31st, 2020, 1:35 PM GMT+0000

The coronavirus crisis has throttled economic growth and dragged down corporate profits. The U.S. has also seen a cascade of bankruptcies since the onset of the pandemic. Lisa Abramowicz looks at what’s driving the distress on corporate balance sheets. (Source: Bloomberg)


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