Corporate credit markets after the initial pandemic shock

Sirio Aramonte and Fernando Avalos

No 26, BIS Bulletins from Bank for International Settlements

Abstract: Corporate funding markets partially resumed after seizing up in mid-March 2020 - but at much higher spreads and with sharper sectoral differentiation. In March, wide spreads for highly rated energy firms pointed to significant downgrade risk. Post-GFC leverage build-up amplified the damaging effects of financial stress during the pandemic. The unusually broad impact of the pandemic shock on lower-rated firms threatens CLO structures, though not as much as the bursting of the housing bubble undermined CDOs.

Pages: 9 pages
Date: 2020-07-01
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Citations: View citations in EconPapers (11)

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