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Thu Jun 4, 2020, 10:42 AM

Wall Street Warning to Corporate America: Get Cash While You Can

(Bloomberg) Bankers have a message for America’s debt-laden companies: raise money now, because things could get a lot worse.

The gradual reopening of businesses after months-long shutdowns and a pick up in manufacturing activity have given investors reason for optimism in recent weeks. But underwriters who cater to heavily indebted corporations are offering their clients a bleak preview of what may lie ahead.

The long list of worries includes a new wave of coronavirus contagion in the fall, an extended period of double-digit unemployment, a spike in defaults and a slower-than-expected economic recovery as businesses around the globe adapt to the realities of prolonged social distancing.

Of course, pitching bond sales to companies is part of the job description, and corporate treasurers expect nothing less from bankers whose bonuses are tied to how many deals they do. Still, the grim warnings to stockpile cash reflect how the rally that credit markets have enjoyed since the Federal Reserve took action may be obfuscating an economic picture still fraught with risks. ..............(more)


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Reply Wall Street Warning to Corporate America: Get Cash While You Can (Original post)
marmar Jun 4 OP
SWBTATTReg Jun 4 #1

Response to marmar (Original post)

Thu Jun 4, 2020, 10:51 AM

1. Maybe don't be in debt either? This is really the best choice to make, instead of raising cash for

yet more debt taken on. Wall Street or the banks must be getting desperate to underwrite debt securities (to get more cash as the article seems to imply).

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