The Credit Edge by Bloomberg Intelligence

Private companies struggle to repay borrowed funds as interest rates rise; concerns about a debt crisis in China and the potential value of offshore bonds; challenges in measuring market problems and impact on businesses; focus on sectors targeted by private credit funds and debt-for-equity swaps; China's economy facing deceleration, property crisis, struggling exports; role of state-owned banks in preventing private debt defaults in China.

Leveraged loan defaults surpass junk bonds, causing pain for companies with floating-rate debt. Bloomberg Intelligence analyst discusses the debt crisis at troubled Chinese developer Country Garden.

Yellow — the bankrupt trucking firm — is deciding between competing financing packages from lenders including Apollo, Bloomberg News’ Amelia Pollard says. The company owes the US government more than $700 million from a pandemic-era loan. Also on this episode of the Credit Edge podcast, Bloomberg News corporate finance reporter Olivia Raimonde chats with Bloomberg Intelligence analyst Julie Hung about M&A in the consumer sector. Hung walks us through recent credit downgrades in the industry.See omnystudio.com/listener for privacy information.

Leveraged loans are enjoying a euphoric risk-on period of excess demand for limited supply, according to Bloomberg News’ Jeannine Amodeo. Banks offloading hung buyout debt at a steep discount could send prices back down but there are reasons to be bullish on the market for the rest of this year, Amodeo says. In this episode of the Credit Edge Podcast, Bloomberg News senior editor James Crombie also asks Bloomberg Intelligence analyst Mary Ellen Olson about high-yield opportunities in the Indonesian commodity sector. Olson sees nickel producers benefiting from electric vehicle manufacturing, just as coal companies receive a regulatory boost.See omnystudio.com/listener for privacy information.

Carvana is a rare case of lenders working together to agree restructuring terms and could be a blueprint for other distressed debt situations, according to Bloomberg News’ Erin Hudson. The used-car seller won a second chance by eliminating $1.2 billion of debt, but it still faces fundamental headwinds. In this episode of the Credit Edge Podcast, Bloomberg News senior editor James Crombie also asks Bloomberg Intelligence analyst Aidan Cheslin about the risks to Telecom Italia’s bonds as the company sells assets to reduce leverage. Cheslin also looks at the potential for Spanish tower operator Cellnex to become a rising star.See omnystudio.com/listener for privacy information.

China’s local governments are struggling to repay trillions of dollars in infrastructure debt, just as more property developers tip into distress, according to Bloomberg News’ Wei Zhou. A Chinese municipal default would send shock waves through global markets, but Beijing is at pains to avoid the moral hazard of a bailout. In this episode of the Credit Edge Podcast, Bloomberg News senior editor James Crombie also asks Bloomberg Intelligence analyst Himanshu Bakshi about the risk to Canadian banks of a spike in mortgage defaults. The main financial institutions can withstand significant real estate stress, though their bonds may come under pressure.See omnystudio.com/listener for privacy information.

Signs of life in collateralized loan obligations signal credit market healing, according to Bloomberg News’ Lisa Lee. But it’s too early to predict broad and sustained recovery as interest rate and macroeconomic risks abound. In this episode of the Credit Edge Podcast, Bloomberg News senior editor James Crombie also asks Bloomberg Intelligence analyst Stephane Kovatchev about growing stress on the container shipping sector as demand crumbles. Smaller companies are most threatened by a steep drop in freight rates after a Covid-19-era windfall.See omnystudio.com/listener for privacy information.

Bonds backed by car loans are headed for their first loss since the 1990s as Americans fall behind on payments and dealerships collapse, says Bloomberg News’ Carmen Arroyo. Consumers are burning through pandemic-era savings and hitting a wall with interest costs soaring. In this episode of the Credit Edge Podcast, Bloomberg News senior editor James Crombie also asks Bloomberg Intelligence analyst Paul Vickars about distress at Thames Water, the UK’s biggest water provider. Other companies in the sector are also running into trouble as inflation keeps rising, says Vickars.See omnystudio.com/listener for privacy information.

Canadian pensions are piling into private debt, lured by fatter returns than in corporate bonds, says Bloomberg News’ Paula Sambo. But smaller funds are struggling to raise cash for the strategy as public markets get cheaper, and there may be more private credit distress to come. In this episode of the Credit Edge Podcast, Bloomberg News senior editor James Crombie also asks Bloomberg Intelligence analyst Stephen Flynn about the telecoms and media outlook. The debt of Paramount Global trades at much wider spreads than peers, but may be due for a correction tighter.See omnystudio.com/listener for privacy information.

Troubled companies are selling assets to relieve pressure from rising rates, slumping earnings and a looming maturity wall, says Irene Garcia Perez, who covers distressed debt for Bloomberg News. But potential buyers are offering less than sellers hoped and some corporations are offloading trophy holdings to generate cash. In this episode of the Credit Edge Podcast, Bloomberg News senior editor James Crombie also asks Bloomberg Intelligence analyst Tolu Alamutu about the outlook for SBB, the Swedish company at the epicenter of a property meltdown. The crisis is getting worse by the day and has significant implications for credit markets beyond Sweden.See omnystudio.com/listener for privacy information.