The Bank of Canada is singling out corporate debt as a leading risk to the nation's economy, noting that non-financial corporate debt was 315% of income at the end of last year. Also higher than average is the share of outstanding debt for companies with poor debt-service capacity and few liquid assets.
Emerging markets are receiving the lowest foreign direct investment in 20 years, with little hope of improvement amid US-Chinese trade tensions, according to a report by the Institute of International Finance. Low interest rates have sent a "wall of money" to emerging markets during the past decade "so that there is now a positioning overhang," the report notes.
Corporate borrowing levels in the leveraged-loan market are a credit risk that requires closer scrutiny, US regulators told a Senate committee. Companies are taking on higher levels of debt relative to their earnings, with few covenants to protect lenders and increasingly relaxed repayment terms, Comptroller of the Currency Joseph Otting said.
The leverage ratio conceived after the financial crisis as a sensible way to prevent banks from artificially lowering their required capital levels has instead hardened into a binding requirement for many banks, writes Louie Woodall. That plus different interpretations of the ratio by different national regulators tend to "undermine its original purpose as a universal capital backstop" and call into question its very purpose.
Congress should take action if the Financial Accounting Standards Board moves forward with new loan loss standards for banks, said Rep. Brad Sherman, D-Calif. The rules are scheduled to take effect in 2020, but Sherman is calling for a delay.
With new Basel rules projected to take effect in 2023, some banks are backing away from structured products that are linked to funds. Others are charging more for such products, and still others are considering what to do.
The IACPM thanks the IACPM Spring Conference Program Committee and all of the speakers who participated in last week's IACPM Annual Spring Conference. Conference participants have received an email with instruction how to access conference presentations. For questions, please contact firstname.lastname@example.org.
Nobody is going to notice your failure. Your failure is not going to be so spectacular that people write news stories about it. Your failure will be boring.
Kumail Nanjiani, actor, comedian and podcast host
May is Asian/Pacific American Heritage Month
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