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☆ Uncertain 2024 makes US companies refinance debt sooner, not later
▼ + stars: | 2023-11-30 | by ( Matt Tracy | ) www.reuters.com time to read: +3 min

Doubts that debt issuance conditions will be as strong in 2024 as they are now, with markets still divided on the direction of interest rates and the economy, have also driven the interest in doing deals now. Credit spreads are underpricing recession risk, said Nate Thooft, senior portfolio manager for Manulife Investment Management. Even if companies waited for rate cuts in 2024, declines in all-in funding costs may not necessarily follow, as credit spreads could then widen, said Amol Dhargalkar, managing partner at Chatham Financial. But Natalie Trevithick, head of investment grade credit strategy at Payden & Rygel, said economic data was too strong for cuts. Some $770 billion of investment-grade rated bonds mature in 2024 and over $900 billion in both 2025 and 2026, according to data by Morgan Stanley (MS.N).

Persons: Joshua Roberts, Maureen O'Connor, Edward Marrinan, Nate Thooft, Amol Dhargalkar, Natalie Trevithick, Morgan Stanley, Steven Oh, Matt Tracy, Shankar Ramakrishnan, Davide Barbuscia, Barbara Lewis Organizations: Federal Reserve, REUTERS, ICE, BMO Capital Markets, Investment, Informa Global, Treasury, Federal, Nikko Securities America, Manulife Investment Management, Chatham Financial, Deutsche Bank, PineBridge Investments, Thomson Locations: Washington , U.S, Wells, U.S

REUTERS/Lori Shepler/File Photo Acquire Licensing RightsNov 27 (Reuters) - U.S. bond giant Pacific Investment Management Company (PIMCO) said on Monday it expects the next few years to provide the best opportunities for private credit investors since the global financial crisis. "As private credit investors, this is the environment we’ve been waiting for," portfolio managers at PIMCO said in a note. In particular, PIMCO expects the lower liquidity environment to create opportunities for private credit investors in specialty finance - collateral-based loans to consumers and small businesses - as well as in senior corporate loans and commercial real estate. Within specialty finance, the asset manager singled out residential mortgage credit, solar and home improvement lending, equipment finance and aircraft leasing. PIMCO said it expects opportunities for private credit to provide such financing not just directly to borrowers, but also to banks and non-bank lenders.

Persons: Lori Shepler, PIMCO, Matt Tracy, Davide Barbuscia, Nick Zieminski Organizations: REUTERS, Pacific Investment Management Company, Thomson Locations: Newport Beach , California

☆ US high-grade corporate bond spreads to tighten in 2024 :JPM
▼ + stars: | 2023-11-21 | by ( Matt Tracy | ) www.reuters.com time to read: +2 min

REUTERS/Brendan McDermid/File Photo Acquire Licensing RightsNov 21 (Reuters) - Spreads on U.S. corporate high-grade bonds are likely to tighten in 2024, according to JPMorgan (JPM.N). In a report published on Monday, JPMorgan forecast that returns on high-grade bonds will reach new highs in 2024 that will continue through the end of the year. The bank anticipates total returns on high-grade bonds climbing to 12.4% by year-end 2024 from 1.8% currently. Lower new bond supply next year will contribute to high-grade spreads' tightening, according to the report. At the same time as it expects high-grade spreads to tighten next year, JPMorgan forecast that high-yield bond spreads will widen.

Persons: Brendan McDermid, HG, Matt Tracy, Marguerita Choy Organizations: Wall, REUTERS, JPMorgan, HG, Federal Reserve, Treasury, UST, Thomson Locations: New York, U.S

☆ Morgan Stanley urges higher quality corporate bonds as 2024 maturities approach
▼ + stars: | 2023-11-20 | by ( Matt Tracy | ) www.reuters.com time to read: +2 min

REUTERS/Brendan McDermid/File Photo Acquire Licensing RightsNov 20 (Reuters) - Investment bank Morgan Stanley (MS.N) is recommending that corporate bond investors focus on higher quality investment-grade and high-yield bonds headed into next year, as a wave of maturities poses risk to more junk-rated companies. Morgan Stanley said it suspects the Federal Reserve has neared the end of its rate-hiking cycle, with a soft landing for the economy in the cards next year. As maturities hit next year, 15-20% of this ratings class is likely to see downgrades to CCC, according to Morgan Stanley. Downgrades will not be limited to junk issuers, Morgan Stanley added. On the leveraged loan front, Morgan Stanley said it expects a return in loan issuance next year for M&A and leveraged buyouts, buoyed in part by anticipated Fed rate cuts.

Persons: Brendan McDermid, Morgan Stanley, maturities, Downgrades, Matt Tracy, Stephen Coates Organizations: Wall, REUTERS, Investment, Federal Reserve, BBB, Thomson Locations: New York, U.S

☆ US commercial property loan activity to drop off in Q4 after Q3 pickup -DBRS
▼ + stars: | 2023-11-20 | by ( Matt Tracy | ) www.reuters.com time to read: +2 min

The third quarter saw roughly $3 billion in new collateralized loan obligations (CLOs) backed by CRE loans, according to a Friday report by DBRS. This marks a significant turn from the second quarter, which saw less than $1 billion in CRE CLO issuance. Office-backed loans represented almost half of all CRE delinquencies in the third quarter, according to DBRS. An overall 3.27% delinquency rate for CRE CLOs in the third quarter was roughly in line with the second quarter rate, according to DBRS. There were $2.67 billion in delinquent CRE CLO loans as of September, a $20 million increase from the second quarter.

Persons: Marco Bello, DBRS Morningstar, CLOs, Loans, CRE CLOs, CRE, Matt Tracy, David Gregorio Our Organizations: U.S, DBRS, CRE, Thomson Locations: Miami, Biscayne Bay, Brickell, Downtown, Miami , Florida, U.S, DBRS, delinquencies

☆ US bond investors with mild recession concerns on the rise -BofA
▼ + stars: | 2023-11-13 | by ( Matt Tracy | ) www.reuters.com time to read: +2 min

Corporate bond investors are more selective with their funds, as their cash levels declined in November from September, according to the BofA survey. Investment-grade investors shifted to debt maturing between five and 10 years, while high-yield investors positioned more into debt maturing in one to three years. Some 41% of junk bond investors (compared to 24% in September) expect those rated BB to outperform, followed by B and BBB. The combination of attractive yields and recession concerns has made investment-grade bonds a popular choice for junk bond investors. Both high-grade and junk bond investors were underweight debt issued by companies in the industrial and telecom sectors at the time of the survey.

Persons: BofA, Matt Tracy, Andrea Ricci Organizations: Bank of America, BBB, Thomson Locations: U.S

☆ More junk-rated companies downgraded than upgraded in October -JPM
▼ + stars: | 2023-11-09 | by ( Matt Tracy | ) www.reuters.com time to read: +1 min

REUTERS/Rick Wilking/File Photo Acquire Licensing RightsNov 9 (Reuters) - More U.S. high-yield bond issuers saw downgrades to their credit ratings than upgrades last month, JPMorgan (JPM.N) said in a research report. October saw downgrades to 18 junk bond issuers' ratings accounting for $22.2bn in debt, while just 16 issuers were given upgrades by ratings agencies, the JPMorgan report said. This is the first time downgrades have surpassed upgrades on U.S. junk-rated borrowers in four months, it added. Changes to credit ratings are significant for a company, since lower ratings most often result in higher borrowing costs. While high-grade companies' credit ratings have proven resilient during the Federal Reserve's interest-rate hikes, businesses with significant leverage and floating-rate debt have struggled to keep pace with rising debt-servicing costs.

Persons: Rick Wilking, downgrades, Matt Tracy, Alexander Smith Organizations: REUTERS, U.S, JPMorgan, Moody's, Service, Thomson Locations: Westminster , Colorado

☆ US companies' debt cushion smallest since Q1 2021 :BofA
▼ + stars: | 2023-11-08 | by ( Matt Tracy | ) www.reuters.com time to read: +2 min

Coverage ratios hit their lowest since the first quarter of 2021, when companies in many sectors struggled with pandemic-related supply cost increases and weak demand. Median year-over-year earnings growth jumped 4.2% in the third quarter, from 0.6% in the second quarter, according to BofA Global. The median cost of debt increased to 3.77% in the third quarter from the second quarter - its highest since the fourth quarter of 2018. Companies' gross debt was little changed, but net debt growth turned negative for the first time since the third quarter of 2021. "(Investment-grade) issuers continued to manage their balance sheets conservatively in 3Q," wrote Yuri Seliger, credit strategist at BofA Global.

Persons: Carlo Allegri, Yuri Seliger, Matt Tracy, Chizu Organizations: New York Stock, REUTERS, BofA Global Research, BofA Global, Companies, BofA, Thomson Locations: Manhattan, New York City , New York, U.S, 11.24x

☆ Banks report continued pain on commercial real estate loans
▼ + stars: | 2023-10-18 | by ( Matt Tracy | ) www.reuters.com time to read: +4 min

REUTERS/Amr Alfiky/File photo Acquire Licensing RightsOct 18(Reuters) - A number of U.S. banks saw continued pain in the third quarter on delinquent commercial real estate (CRE) loans in their portfolios, as stress in the sector persists. As a result, banks recorded continued provisions for credit losses and charge-offs from the previous quarter, driven by their non-performing (NPL), or delinquent, CRE loans. Borrowers have struggled to refinance their CRE loans as property values have declined and interest costs have risen. Some $20 billion of office commercial mortgage-backed securities, which bundle together individual loans, mature in 2023, according to real estate data provider Trepp. "While overall credit quality remains strong across our portfolio, the pressures we anticipated within the commercial real estate office sector have begun to materialize," PNC Chief Financial Officer Robert Reilly told analysts.

Persons: Amr Alfiky, Cole, that's, Morgan Stanley, Goldman Sachs, JPMorgan, Mayra Rodriguez Valladares, Wells, Robert Reilly, Matt Tracy, Lananh Nguyen, Jonathan Oatis Organizations: REUTERS, Florida Atlantic University, Bank of America, Trepp, Regulators, JPMorgan, Citigroup, PNC, Thomson Locations: New York City, U.S

☆ Global markets brace for fallout as Middle East tensions rise
▼ + stars: | 2023-10-15 | by ( Matt Tracy | ) www.reuters.com time to read: +3 min

Oil prices leapt nearly 6% on Friday, as investors priced in the possibility of a wider Middle East conflict. The first indicator of reaction to weekend developments will likely come when oil starts trading in Asia later on Sunday. Reuters Graphics"I have no clue whether markets will remain relatively well behaved," said Erik Nielsen, group chief economics advisor at UniCredit. The war between the Islamist group Hamas and Israel poses one of the most significant geopolitical risks to oil markets since Russia's invasion of Ukraine last year. Rising oil prices are unlikely to have a significant impact on U.S. gas prices or consumer spending, analysts noted.

Persons: Violeta Santos Moura, Ben Cahill, Erik Nielsen, Bernard Baumohl, Baumohl, it's, Nomura, George Moran, Matt Tracy, Dhara, Megan Davies, Muralikumar, Emelia Organizations: REUTERS, Rights, Hamas, Energy Security, Center for Strategic, International Studies, Reuters, U.S, Economic Outlook Group, European Central Bank, Chevron, Thomson Locations: Gaza, Kibbutz Beeri, Israel, Palestinian, Asia, UniCredit, Princeton , New Jersey, United States, Europe, Ukraine, Egypt, Washington, London

☆ Ripple effect seen on markets globally from Middle East conflict
▼ + stars: | 2023-10-15 | by ( Matt Tracy | ) www.reuters.com time to read: +3 min

Israeli tanks are seen in the aftermath of a mass infiltration by Hamas gunmen from the Gaza Strip, in Kibbutz Beeri in southern Israel, October 14, 2023. Israel was preparing on Saturday to launch a ground assault in the Hamas-controlled Gaza Strip, after telling Palestinians living in the territory to flee south. "If it looks like a broadening conflict, oil prices will rise further," said Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado. "The bigger risk to the oil market is that this conflict draws in neighboring countries," said CSIS' Cahill. Rising oil prices are unlikely to have a significant impact on U.S. gas prices or consumer spending, analysts noted.

Persons: Violeta Santos Moura, Ben Cahill, Michael Englund, Bernard Baumohl, Baumohl, Cahill, " Englund, Matt Tracy, Megan Davies, Muralikumar Organizations: REUTERS, Rights, Israeli, Lebanese, Energy Security, Center for Strategic, International Studies, U.S, Economics, Economic Outlook Group, Chevron, Thomson Locations: Gaza, Kibbutz Beeri, Israel, safehavens, Boulder , Colorado, Princeton , New Jersey, U.S, Egypt

☆ US junk debt deals carry higher guardrails for investors
▼ + stars: | 2023-09-15 | by ( Matt Tracy | ) www.reuters.com time to read: +4 min

Twelve high-yield issuers have raised $9.6 billion this week, making it the busiest week since November 2021, according to JPMorgan. This stands in stark contrast to the same period in 2022, when only 25% of a total $81 billion was secured debt, according to Informa Global Markets data. According to rating agency Fitch, junk debt defaults are expected to reach 4.5% of all outstanding U.S. junk debt by the end of 2023, up from 2.8% in July. The extra level of protection and high investment returns are ensuring strong demand for new junk debt. The loans are part of a $9.4 billion debt package - the largest since last year's buyout of Twitter by billionaire Elon Musk.

Persons: Brendan McDermid, Fitch, Anthony Canale, it's, Brian Gelfand, TCW, Goldman Sachs, Elon Musk, Jefferies, Simon, Matt Tracy, Shankar Ramakrishnan, Hugh Lawson Organizations: New York Stock Exchange, REUTERS, JPMorgan, Informa, Reuters, Covenant, ICE, Morningstar, GTCR, KKR, Jefferies, Thomson Locations: New York City, U.S

☆ US junk debt issuers use window to extend liabilities but at higher costs, Morgan Stanley report says
▼ + stars: | 2023-09-15 | by ( Matt Tracy | ) www.reuters.com time to read: +2 min

REUTERS/Lee Jae-Won/File Photo Acquire Licensing RightsSept 15 (Reuters) - U.S. junk-rated companies are using a more favorable debt issuance window this year to extend billions of dollars of short-term liabilities. Twelve high-yield issuers have raised $9.6 billion this week, making it the busiest week since November 2021, according to JPMorgan (JPM.N). Ninety of these borrowers used the money raised to refinance, the report noted. Junk bond issuers are now paying roughly 100 to 300 basis points more in coupons on new refinanced debt relative to in-place coupons, according to the report. But the opportunity to refinance is not open to all junk-rated issuers.

Persons: Lee Jae, Morgan Stanley, Matt Tracy, Nick Zieminski Organizations: REUTERS, JPMorgan, CCC, Thomson Locations: Seoul

REUTERS/Florence Lo/Illustration Acquire Licensing RightsSept 5 (Reuters) - A post Labor-day rush of bond issuance by U.S. investment-grade-rated companies added renewed pressure on long-end U.S. Treasuries, as some investors switch to buying top-rated corporate debt offering higher yields than those on government bonds. Investors told Reuters they expect anywhere between $100 billion and $150 billion in new bond issuance this month. Ten-year Treasury bond yields were last about nine basis points above Friday's market closing, at 4.27% from 4.180%, and 30-year yields similarly climbed about 9 bps to 4.38% from 4.285% on Friday. Other factors have also contributed to the selloff, from higher government bond supply to rising concerns around U.S. debt sustainability, as highlighted by Fitch’s downgrade of U.S. debt last month. "For right now, it’s just all about supply, and I think that’s what’s pushing yields higher," he said.

Persons: Florence Lo, Gennadiy Goldberg, Tom di Galoma, it’s, Philip Morris, Matt Tracy, Davide Barbuscia Organizations: REUTERS, Labor, Financing, Investors, Reuters, Fed, ICE, TD Securities USA, Federal Reserve, JPMorgan Chase, Tuesday's, Unilever Capital Corp, Philip Morris International, Volkswagen, Thomson Locations: U.S

A view of a damaged house after the arrival of Hurricane Idalia, in Cedar Key, Florida, U.S., August 31, 2023. REUTERS/Marco Bello Acquire Licensing RightsAug 31 (Reuters) - Florida-only insurers such as Citizens Property Insurance anticipate fewer losses from Hurricane Idalia than from previous storms in the state, even as industry experts expect further insurer pullback from the market. "This certainly will not help with ongoing challenges to Florida's insurance market, but it could have been a lot worse," said Steve Bowen, chief science officer at reinsurer broker Gallagher Re. The top 10 U.S. homeowners insurers such as State Farm and Allstate Corp (ALL.N) average only about 4.1% of their premiums in Florida, Moody's said. Reuters GraphicsThe exit of insurers from Florida comes amid a broader pullback from the market, including from reinsurers, according to an Aug. 24 Fitch report.

Persons: Hurricane Idalia, Marco Bello, Ian, Idalia, Moody's, Steve Bowen, Gallagher, Fitch, Noor Zainab Hussain, Manya, Matt Tracy, Shinjini Ganguli, Megan Davies, Matthew Lewis Organizations: REUTERS, Property Insurance, Hurricane, Reuters, Citizens, UBS, Insurance Information Institute, Gallagher Re, Farmers Insurance, Bankers Insurance, Lexington Insurance, AIG, Farmers, Bankers, Farm, Allstate Corp, Insurance, Institute, Manya Saini, Thomson Locations: Cedar Key , Florida, U.S, Florida, Florida's, Coast, Tampa Bay, Jacksonville, Idalia, USA, Lexington, reinsurers, South Carolina, Bengaluru, Washington

☆ Idalia to boost Florida apartment insurance costs further
▼ + stars: | 2023-08-31 | by ( Matt Tracy | ) www.reuters.com time to read: +5 min

Costs have risen the most on multifamily properties such as apartments and condos, according to industry executives and data from credit ratings agency Moody's. Property insurance costs to multifamily assets in Florida have gone up anywhere from 30% to 70% in the past year, and are even higher for those with prior losses, non-renewing insurance carriers or valuation issues, she said. Nationally, CRE properties' insurance costs have grown roughly 7.6% annually on average since 2017, according to an August Moody's report. RENTS, CAP RATESRising insurance premiums on multifamily properties have contributed, among other factors, to rent increases in Florida and elsewhere, said three industry executives. Insurance costs are also forcing CRE lenders to boost due diligence on refinancing and when pricing deals on apartment blocks, executives said.

Persons: Daniel Hokanson, Ian, Kevin, Idalia, Walker, Dunlop, you’re, Willy Walker, multifamily, Ryan Barber, Marsh, Martha Bane, Gallagher, Bane, Matt Tracy, Michelle Price, Marguerita Choy Organizations: U.S . Army National Guard, . National Guard Bureau, REUTERS, Florida, Carolinas, Reuters, Walker, UBS, Insurance, Thomson Locations: Fort Myers, Fort Myers , Florida, U.S, Hawaii's, Maui, Lahaina, California, Florida, Miami, Tampa, Orlando

Country Garden is China's largest private developer. Country Garden has been in talks with onshore creditors to extend payments on the private bond and has proposed to repay in instalments over three years instead of meeting its obligations by the deadline on Saturday. "Country Garden may be able to extend its debts, but it does not mean the company and property sector are out of the woods unless home sales rebound." On Wednesday, creditors holding 10.5% of the outstanding principal, added a new proposal where they can vote to immediately call the company in default. The company's extension plan for the onshore private bond calls for payments in seven instalments ending in September 2026.

Persons: Matthew Pestronk, Goldman Sachs, Moody's, Kaven Tsang, Gary Ng, Ng, Xie Yu, Clare Jim, Li Gu, Matt Tracy, Sumeet Chatterjee, Anne Marie Roantree, Jacqueline Wong, Kim Coghill, Susan Fenton Organizations: HK, Post, People's Bank of China, Thursday, Asia Pacific, Thomson Locations: China, HONG KONG, SHANGHAI, Beijing, Hong Kong, Philadelphia, Guangzhou, Shenzhen, Caa1, Asia, Shanghai

☆ Bond investors show confidence in Schwab after cost-cutting
▼ + stars: | 2023-08-23 | by ( Matt Tracy | ) www.reuters.com time to read: +3 min

The company logo for Financial broker Charles Schwab is displayed at a location in the financial district in New York, U.S., March 20, 2023. The announcement led to a 5% fall in Schwab shares on Tuesday but did not hurt investor appetite for its new bonds. "The strong response shows bond investors, at least in the near term, have gotten over their worries about the credit fundamentals of top-tier regional banks after the banking crisis in March," said Richard Wolff, head of U.S. syndicate at Societe Generale (SOGN.PA). Schwab's bond trade also drew attention as new investment grade bond supply this month has so far been lower than expected. Counting Schwab's $2.35 billion in bonds, investment-grade bond volume sits at just $3.45 billion for the week and $67.1 billion so far in August, according to Informa Global Markets data.

Persons: Charles Schwab, Brendan McDermid, Schwab, Richard Wolff, Dan Krieter, Brian Mulberry, David Del Vecchio, Natalie Trevithick, Matt Tracy, Nupur Anand, Shankar Ramakrishnan, Sonali Paul Organizations: REUTERS, Societe Generale, BMO Capital, Zacks Investment Management, Federal Home Loan Bank, Payden, Informa, Thomson Locations: New York, U.S, Los Angeles

☆ Savoring and Saving: Cooking on Vacation
▼ + stars: | 2023-08-18 | by ( Elaine Glusac | ) www.nytimes.com time to read: +1 min

Matt Tracy, 45, a shoe distributor based in Portland, Maine, loves to cook. “We save a tremendous amount of money cooking,” he said. “We love going out to dinner, but with two kids and other guests it’s expensive.”Whether catering to allergies or other dietary needs, ensuring family harmony or sticking to a budget, cooking on vacation is increasingly popular among travelers choosing short-term rental accommodations. According to a 2023 travel trend report from the vacation rental platform Vrbo, demand for “foodie-menities” is on the rise. Sixty-five percent of users surveyed said equipment like a barbecue, air fryer and deluxe coffee machine were more important than the destination.

Persons: Matt Tracy, , ”, “, fryer Organizations: “ Locations: Portland , Maine, Tuscany

☆ Analysis: Country Garden undone by promise to bring 5-star life to China's hinterland
▼ + stars: | 2023-08-16 | by ( Clare Jim | ) www.reuters.com time to read: +4 min

The company logo of Chinese developer Country Garden is pictured at the Shanghai Country Garden Center in Shanghai, China August 9, 2023. Smaller Chinese cities, whose revenues have already been deteriorating, could have a glut of unfinished homes, a social problem Beijing is trying to avoid. But as China's economy started slowing during and after its COVID-19 lockdowns, property sales in those areas has plummeted along with values of the homes themselves. Country Garden's sales in 2020 were 570.7 billion yuan ($78.22 billion), but that slipped to 357.5 billion yuan in 2022. Country Garden has nearly 1 million homes to complete, according to estimates from Japanese investment bank Nomura.

Persons: Aly, HONG KONG, Oscar Choi, Yang Huiyan, Lu Ting, Nomura, Gerwin Bell, Clare Jim, Liangping Gao, Matt Tracy, Davide Barbuscia, Christian Schmollinger Organizations: Shanghai Country Garden, REUTERS, Country, HK, National Bureau, Statistics, Partners Capital, China Evergrande, Oxford Economics, Nomura, Thomson Locations: Shanghai, China, HONG, Beijing, Dezhou, Hong Kong, Asia, Washington, New York

☆ Distressed US corporate debt trading touches 11-month low: JPM
▼ + stars: | 2023-08-08 | by ( Matt Tracy | ) www.reuters.com time to read: +2 min

REUTERS/Stephanie Keith/File Photo/File PhotoAug 8 (Reuters) - The amount of U.S. corporate loans and bonds trading at distressed levels has reached its lowest in 11 months, according to a JPMorgan (JPM.N) research report on Tuesday. However, the volume of junk-rated corporate loans themselves trading at distressed levels has fallen for two consecutive months, nearing a year-to-date low in July, it said. At the end of July, $110 billion of outstanding loans traded at distressed levels. It marked the second straight month of declining distressed trading of junk-rated loans, after reaching a year-high in May, according to data in the report. At 22%, loans to junk-rated healthcare sector issuers made up the highest portion of distressed trading last month, according to the JPMorgan report.

Persons: Stephanie Keith, Shirley Singh, Singh, Matt Tracy, Deepa Babington Organizations: JPMorgan, REUTERS, Moody's Investors Service, Moody’s, Thomson Locations: New York City, U.S, . Federal

☆ US bank regulators announce sweeping proposals on capital rules
▼ + stars: | 2023-07-27 | by ( ) www.reuters.com time to read: +4 min

WASHINGTON, July 27 (Reuters) - U.S. regulators unveiled a sweeping overhaul Thursday that would direct banks to set aside billions more in capital to guard against risk. If fully implemented, the proposal would raise capital requirements for large banks by an aggregate 16% from current levels, with the brunt felt by the largest and most complex firms, regulators said. Here are key quotes about the proposal:FINANCIAL SERVICES FORUM CEO KEVIN FROMER"There is no justification for significant increases in capital at the largest U.S. ANDY DUANE, ATTORNEY AT POLUNSKY BEITEL GREEN "Raising capital requirements could see regional banks shift away from mortgage lending. Even larger bank lenders could continue to retreat from mortgage lending or impose sharp increase in fees passed along to borrowers."

Persons: KEVIN FROMER, RICK MECKLER, CHERRY, MAYRA RODRIGUEZ VALLADARES, KENNETH BENTSEN, BRIAN MOYNIHAN, ANDY DUANE, GREG BAER, Pete Schroeder, Matt Tracy, Tatiana Bautzer, Nupur Anand, Sinead Carew, Lananh Nguyen, Nick Zieminski Organizations: Regulators, NEW VERNON, NEW, MRV, AMERICA, FOX, Thomson Locations: U.S, CHERRY LANE, NEW JERSEY, Basel, United States, Washington, New York

☆ US commercial property delinquencies rise further in July -report
▼ + stars: | 2023-07-26 | by ( Matt Tracy | ) www.reuters.com time to read: +2 min

The rise in the rate reflects continued stress in the U.S. commercial real estate sector as a post-pandemic environment had more people working from home or shopping online. Office loans made up roughly 35% of the newly special serviced and delinquent loans in July rated by KBRA at $898.4 million. So far in July, multiple office properties have been transferred to special servicing due to imminent monetary default. The total special servicing balance on multi-loan CMBS sharply increased $830.7 million to $14 billion, the largest rise since August 2020, the report said. KeyBank's subsidiary KeyBank Real Estate Capital handles commercial real estate lending and servicing.

Persons: Amr Alfiky, KBRA, Chris Gorman, KeyCorp, Matt Tracy, Shankar Ramakrishnan, Jamie Freed Organizations: REUTERS, KBRA, Estate Capital, Thomson Locations: New York City, U.S

☆ Factbox: U.S. banks increase reserves for commercial real estate exposure
▼ + stars: | 2023-07-21 | by ( Matt Tracy | ) www.reuters.com time to read: +5 min

While regional banks carry the greatest exposure to the commercial real estate (CRE) sector, second quarter earnings show that a number of big banks have prepared for potential defaults, primarily on office loans. However, Borthwick noted the bank's office CRE exposure was low relative to its overall loan portfolio, at 2%. CRE loans represented just 15% of the bank's overall lending book, while only 1% of the CRE loan portfolio was office-related. WELLS FARGO (WFC.N)The bank said it had a $949 million increase in its allowance for credit losses, primarily CRE office loans. WEBSTER FINANCIAL CORP (WBS.N)The regional bank's nonperforming CRE loans ticked up to $47.9 million last quarter from $35.8 million in the first quarter.

Persons: Goldman Sachs, Andrew Kelly, Alastair Borthwick, Borthwick, GOLDMAN SACHS, markdowns, Denis Coleman, Jeremy Barnum, WELLS, Charlie Scharf, Bruce Van Saun, Dominic Ng, East, James Leonard, MORGAN STANLEY, Webster, Glenn MacInnes, John Ciulla, Matt Tracy, Michelle Price, Nick Zieminski Organizations: New York Stock Exchange, REUTERS, U.S, AMERICA CORP, GOLDMAN SACHS GROUP INC, Goldman, JPMORGAN CHASE &, JPMorgan, Citizens, EAST WEST BANCORP, East, BANCORP, WEBSTER FINANCIAL, Thomson Locations: New York City , New York, U.S, California, CRE

They are a key source of financing for some fintech lenders, which have fewer funding options than banks. As the end of pandemic stimulus and rising inflation led delinquency rates to normalize, investors shunned the fintech ABS market late last year. Fintechs like Upstart (UPST.O), Affirm (AFRM.O) and OneMain Financial (OMF.N) say they are boosting credit quality, in another example of how lenders have been pulling back amid uncertainty over the economic outlook. Still, analysts say it is a sign the fintech ABS market is recovering. For fintech loans to borrowers with weighted average credit scores between 660 and 710, annualized net losses rose by 1.88% month-over-month to 16.61%.

Persons: Sanjay Datta, Datta, Max Levchin, Doug Schulman, OneMain, Finsight, Robert Wildhack, Kroll, Hannah Lang, Matt Tracy, Josie Kao Organizations: Wall Street, OneMain, AAA, Autonomous Research, Kroll Bond Rating Agency, Thomson Locations: Washington

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