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Post #4 (March 30, 2020) Scary Times for U.S. Companies Spell Boom for Restricting Advisers 

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Post #4 (March 30, 2020) Scary Times for U.S. Companies Spell Boom for Restricting Advisers 

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Post #2 (March 30, 2020)
In this article it discusses the struggles companies are already facing with the coronavirus. Business's are getting hit hard due to the virus. Corporations across a wide swath of industries and in vastly different finical straits are being forced to stretch their cash, cut costs, and avoid load defaults. One Cheesecake factory states they cant afford to pay their lease in April for rent. There is going to be a mass amount of bankruptcies within companies. If this lockdown is about 90 days, there will be no issue repairing the economy. If this becomes more than an 18 month event, people will need help. This realte to class material because this has to do with the economy. We learn about how it works and whether or not stocks crash or are

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Corporations are saving cash, cutting costs and refinancing debt to manage the economic fallout of the coronavirus. Restructuring and bankruptcy experts are already getting calls.

A McDonald's restaurant in Brooklyn. The company said recently that it would tap a new $1 billion line of credit from JPMorgan. Credit... Gabby Jones for The New York Times

Freedom Mortgage, one of the nation's largest mortgage lenders, is looking for additional financing as millions of homeowners are expected to stop making mortgage payments. The Cheesecake Factory said this past week it wouldn't be able to make rent payments on its leases because of lost business. And giant companies from Kraft Heinz to Ford have tapped billions of dollars in credit from banks in preparation for an uncertain future.

These are scary times for American companies as they grapple with the hit to their businesses from the shutdown of major parts of the economy from the coronavirus. But for one group in the financial services industry - restructuring and bankruptcy advisers and lawyers - the emerging signs of pain for companies, both big and small, spell booming business.

Corporations across a wide swath of industries and in vastly different financial straits are being forced to stretch their cash, cut costs, avoid loan defaults and prepare to potentially reorganize their businesses.

Restructuring experts are finding themselves in demand, anticipating that companies will not be able to make good on their commitments on time and may seek to negotiate new terms with lenders, vendors, employees and other parties.

Dion Hayes, a restructuring attorney at McGuireWoods based in Virginia, said he was getting lots of calls from "businesses that rely on foot traffic." Sharon Weiss, a bankruptcy lawyer with Bryan Cave in Los Angeles, said she was working with a client in the entertainment business that was looking for another investor to shore up its finances.

And Simon Freakley, the chief executive of AlixPartners, a restructuring consulting firm, said he has had conversations with directors of big companies that are normally flush with cash, but now must do cash-flow projections to simply see how they can get by for the next few months.

Companies that depend heavily on consumer spending are especially troubled. Restructuring advisers expect retailers - whose financial position was already stretched because of the rise of e-commerce - to run into further trouble as people cut back on shopping. Energy companies, which loaded up on debt in the past decade, are convulsing because of low oil prices as demand falls because of the pandemic. Hoteliers, cruise lines, restaurants, event sponsors and mortgage lenders are among those suddenly short on cash, with travel and outdoor activity at a standstill and unemployment soaring.

Carnival, the hard-hit cruise company, has already tapped a $3 billion credit line and said in regulatory filings that it was looking for new financing. The cruise company is working with Wall Street banks to line up investors for a high-interest debt offering, said one person briefed on the matter but not authorized to speak publicly.

"There's going to be a massive amount of bankruptcies, but there has to be an even greater amount of out-of-court restructurings," said David M. Hillman, co-head of the private credit restructuring group at the law firm Proskauer Rose.

A restructuring can happen in out-of-court talks. But when a company's debts are complex or the parties start vying over who will be paid first, the company may seek protection in bankruptcy court, where all the debts are renegotiated under the watch of a judge. In bankruptcy, the company would also seek new financing and a fresh start.

In anticipation of demand, many law firms are redirecting their lawyers into restructuring and bankruptcy-related assignments from other areas. Frank Aquila, a corporate attorney at Sullivan & Cromwell who typically focuses on merger and acquisition work, said he's been spending a lot of time with clients seeking to strengthen their cash position, either by reducing debt, selling assets or considering federal aid.

But Mr. Aquila and other advisers said that businesses generally prefer to work with banks rather than seek a government loan - especially if it means giving up the ability to buy back stock or dealing with restrictions on how the money can be used.

Michael C. Eisenband, a co-leader of corporate finance and restructuring at FTI Consulting, echoed the sentiment. "If you get $100 million, what happens when the company starts to turn around?" he said. "Do the first profits have to pay the government back first?"

Still, some companies - in particular, airlines - will get targeted relief from the $2.2 trillion economic lifeline bill that President Trump signed on Friday, and another $2 trillion that the Federal Reserve is using to keep the bond markets functioning properly.

Corporate failures are inevitable in the current crisis, especially given that there is $6 trillion in U.S. corporate debt that remains outstanding - near record levels. Particularly vulnerable is the $760 billion in junk bonds issued by U.S. companies, with $178 billion of that coming due over the next 12 months, according to Dealogic. Junk bonds pay investors higher interest rates.

Moody's, a credit-rating agency, predicts that the default rate on corporate junk bonds will reach 10 percent by early next year, and the worst case could be as high as 21 percent. In 2009, one year after the last financial crisis, the default rate on junk bonds peaked at 13 percent, and there were 13,439 so-called Chapter 11 bankruptcy filings, which deal with corporate reorganizations.

Defaults will put pressure on mutual funds, pensions, hedge funds, insurers and other firms that invest in corporate bonds - including collateralized loan obligations, a complex security that includes pieces of various corporate bonds. Missed rent payments will not only pressure commercial landlords but bonds backed by income from those leases. And while no one expects a tidal wave of defaults on corporate bonds rated investment grade - meaning minimal risk to investors - a lot of work is going on behind the scenes to prepare for an epic recession.

So far, banks have remained willing to make new loans to big-name corporations that are usually rated investment grade. McDonald's said recently it would tap a new $1 billion line of credit from JPMorgan, and Wells Fargo and Bank of America are lending $425 million to Alaska Air, secured by two dozen aircraft.

Meanwhile, several private equity and hedge fund firms including Fortress, Apollo and Avenue Capital are seeking opportunities to finance companies with riskier debt profiles that need cash, can't get it anywhere else and are willing to pay higher interest rates for it, said people briefed on the matter but not authorized to speak for the firms.

Restructuring advisers expect the real estate sector to be especially hard hit as homeowners and businesses are unable to make mortgage payments. Several mortgage real estate investment trusts, which buy loans backed by mortgages and other real estate assets on behalf of investors, are already asking their lenders to give them more time to come up with money to pay those investors.

And nonbank mortgage servicing firms - which collect mortgage payments from borrowers and then pass on principal and interest payments to investors in bonds backed by those home loans - will see their income slashed because they have to comply with the federal government's mandate to give forbearance to struggling homeowners.

FitchRatings, a credit-rating agency, said that those firms could see "meaningful strains on their liquidity" as income dries up and they still have to pay billions of dollars to investors. In the near term, some of the financial stress may be alleviated by an announcement on Friday from Ginnie Mae, a government agency that guarantees mortgages, that it will provide financial relief to some firms.

Fitch put Freedom Mortgage, a large nonbank mortgage firm, on a negative ratings watch, and said it had privately done the same with several other nonbank mortgage firms it monitors.

Stanley Middleman, chief executive of Freedom, said the action by Fitch was not an accurate portrait of his firm's finances. He said Freedom was well equipped to weather the storm in the mortgage market but is looking to shore up its finances if the public health lockdowns continue far longer than anticipated.

"We don't have anything looming that will cause us liquidity concerns," Mr. Middleman said. "If this is a 90-day event, we have no issue."

But, he added, "If it becomes an 18-month event, we will need help."

Anupreeta Das contributed reporting.

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Scary Times for U.S. Companies Spell Boom for Restructuring Advisers

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Corporations are saving cash, cutting costs and refinancing debt to manage the economic fallout of the coronavirus. Restructuring and bankruptcy experts are already getting calls. Freedom Mortgage, one of the nation's largest mortgage lenders, is looking for additional financing as millions of homeowners are expected to stop making mortgage payments.

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All 50 States now have coronavirus cases
Post #2 (March 17, 2020)

All 50 states now have coronavirus cases
This article discusses the outbreak of the coronavirus, which started off in China and now all 50 states in the U.S. have cases. The main point of this article is describing the health concerns this virus will bring to the United States. This virus marked certain states,  "state of emergency" to close schools nationwide, close bars, limit visitor restriction in hospitals, universities have stopped face to face teaching and have gone online. This virus causes mild symptoms, such as coughing and fever. While severe symptoms, can lead to severe illness and pneumonia. This relates to class material, because literally earlier this month we were discussing how fast coronavirus spreads rapidly. All 50 states have cases and that is insane!

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All 50 U.S. states now have confirmed cases of the new coronavirus as West Virginia's governor announced the first positive test in his state on Tuesday evening.

Gov. Jim Justice said the person with the virus is in the state's Eastern Panhandle, a region close to Washington, D.C., though he didn't disclose the county where it was reported.

Justice used a televised address to announce new restrictions, ordering bars, restaurants and casinos to close with the exception of carry-out food services. He did not address delivery services.

"This is real and it's really concerning," the governor said.

Moments before he went on camera and while the audio was turned on, Justice loudly cleared his throat, then whispered jokingly, "I've got the virus." The portion of the video before he went on camera was later deleted.

But his tone was serious during his eight-minute speech, telling residents to follow experts' advice, including staying out of crowds, washing hands and keeping at least 6 feet away from other people.

"Our power to combat this disease is being apart from one another," he said.

Justice had warned earlier that it was only a matter of time before a confirmed case would be documented in the state. He and state health officials have repeatedly expressed frustration over limited testing nationwide.

Both Justice and U.S. Sen. Joe Manchin (D-W.Va.) have noted the virus could be especially damaging in West Virginia because of the state's elderly population and high percentage of people with existing health problems. About 20% of West Virginia residents are 65 and older.

West Virginia health officials said tests have been conducted so far on 137 people. There have been 122 negative cases and 14 were still pending as of Tuesday evening.

Justice is following the lead of governors from surrounding states who have shut down or limited access to businesses, including bars, restaurants, gyms or movie theaters.

Previously, Justice declared a state of emergency, closed schools statewide until at least March 27, requested that nursing homes limit visitors and suspended state high school basketball tournaments. Justice is a coach of one of the participating girls teams.

State hospitals have restricted patient visits, universities have temporarily eliminated face-to-face instruction in favor of online teaching, and the state Supreme Court has suspended all but emergency hearings until April 10.

For most people, the new coronavirus causes only mild or moderate symptoms, such as fever and cough, and the vast majority recover in several weeks. But for some, especially older adults and people with existing health problems, it can cause severe illness, including pneumonia.

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All 50 states now have coronavirus cases

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All 50 U.S. states now have confirmed cases of the new coronavirus as West Virginia's governor announced the first positive test in his state on Tuesday evening. Gov. Jim Justice said the person with the virus is in the state's Eastern Panhandle, a region close to Washington, D.C., though he didn't disclose the county where it was reported.

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For India's Laborers, Coronavirus Lockdown Is an Order to Starve
Post #3 (March 20, 2020)

This article discusses the outbreak of coronavirus in India and urging people to socially distance themselves. Unfortunately  this is leading to hunger, due to people not being to work. About 80% of people in India depend on labor to provide for themselves. Seeing how something, a virus, can affect people in third developed countries. People are starving in India, all places are closed, and there is not way in people making money. There has never been this much panic in India ever. Citizens in India, wages have been cut in half, which is now about of eight dollars. Eight dollars is not a-lot but to them it can mean everything. Globalization from one country, to the next, and the next, affects every single one differently. This related to class materials because we are also globalization in anothr country, starving and trying to make their meets end. When here in the U.S. we are over stocking on certain food items.

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Despite leaders' decrees on staying home, laborers who live hand-to-mouth say they have no choice but to keep hitting the streets. Here are their stories.

Produce vendors in Delhi last week were hard up for business.

Prime Minister Narendra Modi has ordered a lockdown of India's 1.3 billion citizens to fight the spread of coronavirus, urging people to distance themselves socially and work from home.

But social distancing means hunger for many in India, with a work force heavily dependent on manual labor. It would be an unheard-of luxury for the ragpicker or street vendor who lives day to day.

About 80 percent of India's 470 million workers are in the informal sector, lacking contracts and unprotected by labor laws. Many are manual laborers in the fields, factories and streets of India.

We asked people how they were making ends meet as the economy grinds to a halt with the coronavirus pandemic. India reported 1,024 cases and 27 dead as of Sunday. Here are some of their stories:

Ashu, 12 | ragpicker

Ashu and his two brothers spend their days at one of Delhi's biggest dumps. They are ragpickers - scavengers who hunt for scrap metal using a giant, rusted sieve to help them sort through the stinking refuse.

If Ashu works really hard, he can earn 53 cents a day. He and his brothers have been unable to go to the dump regularly since the lockdown was announced because if they are caught by the police, they will be beaten.

"I miss my friends," he said, adding that he and four buddies would meet at the dumpsite every morning, work for a few hours and then play with whatever treasures they found - broken toy cars, tattered dolls and ripped clothing.

"I hear there is a virus from China going around," Ashu said. "But I'm more afraid of the police and not being able to eat."

"When the money dries up, we will have to find a way to come back here again," he said.

Ramchandran Ravidas, 42 | bicycle rickshaw driver

On a Wednesday afternoon, normally peak rush hour in Delhi, Ramchandran Ravidas was bicycling around in big, lazy circles in the middle of a main thoroughfare, boredom, hunger and his empty pockets on his mind.

On a good day, if he has "a lot of energy" he can make up to 450 rupees, or $6, he said. He lives out of the garage he rents his bicycle rickshaw from and worries that he will be evicted soon; he has had no customers since the lockdown.

"If you don't even have a house, how can you work from home?" Mr. Ravidas said, worry lines furrowing his face. "My home is my work. Today was the first time in my life I had to accept food from a charity."

He said, for him, it was a race between whether the virus or hunger got to him first.

"I'm not worried about corona; if corona comes to get me, at least this life of misery will be over," Mr. Ravidas said, breaking into a grin as he roared with laughter.

Baudghiri, 60 | sadhu (religious ascetic)

Walking barefoot along Delhi's deserted streets, his saffron-colored clothing stained and tattered, Baudghiri said he had not eaten in two days. A sadhu, or religious ascetic, he makes about $1.50 every day by offering prayers to people on the street.

Mr. Baudghiri, who goes by just one name, had never gone hungry a day in his life, he said, and had always found a meal in Hindu temples or gurdwaras, Sikh places of worship. But they have closed since the lockdown started last week.

While he agreed with the prime minister's decision to try to prevent the virus's spread by limiting people's movement, he was frustrated with the government's lack of planning for the destitute like him.

"I do not have a house to practice social distancing in," he said. "I go from place to place, temple to temple, to eat. But the entire city is closed."

In all his decades of walking across India, Mr. Baudghiri said he had never seen India so paralyzed.

"In every crisis, the gurdwaras, the temples were all open," he said. "We were still able to feed ourselves and find shelter. I've never seen this panic in my entire life."

Raj Kumari | street sweeper

Sweeping leaves and trash off a deserted street and dumping them into her rusted wheelbarrow, Raj Kumari said the silence of the normal cacophony of Delhi was glorious, but eerie.

She used to sweep Delhi's streets with her husband, but he died eight years ago. She is now the sole breadwinner for her six children, after her eldest son was laid off from his tech job this past week because of the lockdown.

"It's just me and the sewer cleaners out here now," she said.

The lockdown has affected public transportation, and she now walks two hours just to get to work.

"This is what I have to do for money, for life," she said. "Even if the streets are empty, I have to come out. I don't have the pleasure of staying at home, this is my duty."

The government has never provided Ms. Kumari, who does not know her exact age, with gloves or masks for her job. But one of her daughters forbade her from working without protective gear during the pandemic and gave her a mask that her school had donated to students to protect against Delhi's infamous pollution.

"I'm not afraid of corona," Ms. Kumari said. "Why would anyone fear death when it is time for God to take you?"

Mohan Singh, 18 | fruit seller

Every morning, Mohan Singh and his father pile their carts with fruit and wheel their loads to work, on a busy neighborhood street corner. Although their jobs are deemed necessary and permissible during the lockdown, they say customers are too afraid to come to their carts. By midmorning, they had served one customer between them.

"If we are afraid of this disease, we will die in our homes," Mr. Singh said, adding that he and his father provide for their entire family of six.

Mr. Singh said he was worried that the government was going to help big businesses and that small businesses like his would be overlooked. Although the government announced a $22 billion relief package to support the millions left unemployed because of the crisis, some say people in the informal work force, like Mr. Singh, will have trouble getting help.

"They need to help people like us," he said. "There are more people working on the streets than India's biggest companies. If we close, no one can eat."

Arjun Chauhan, 18 | water deliverer

Many Indian homes lack running water or water safe enough to drink, making Arjun Chauhan's job a necessity during the lockdown. He zipped across Delhi's streets on his moped bike, stacked high with leaking water bottles.

"If we stay at home, my family goes hungry and India goes thirsty," Mr. Chauhan said, adding that his parents and five siblings rely on his wages.

Since the lockdown, Mr. Chauhan has seen his daily earnings of about $8 cut in half. He said he had been unable to reach all his customers because the police had prevented him from deliveries and even beat him for being on the streets although under the lockdown rules, deliveries of necessary items like medicine and water are supposed to be allowed.

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For India's Laborers, Coronavirus Lockdown Is an Order to Starve

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Despite leaders' decrees on staying home, laborers who live hand-to-mouth say they have no choice but to keep hitting the streets. Here are their stories. Prime Minister Narendra Modi has ordered a lockdown of India's 1.3 billion citizens to fight the spread of coronavirus, urging people to distance themselves socially and work from home.

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Post #1(February 26, 2020) World Stock Markets Begin Betting on a Coronavirus Slowdown

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Post #1(February 26, 2020) World Stock Markets Begin Betting on a Coronavirus Slowdown

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Post #1(February 26, 2020) World Stock Markets Begin Betting on a Coronavirus Slowdown

This article discusses the outbreak of the Coronavirus and how it is already potentially affecting markets.The Coronavirus could potentially drag global growth to about 2.3% this year, and it will be the lowest level since the financial crisis.The main point of this article is seeing what the future of the virus brings and the effects it could potentially have on globalization.Markets are  starting to recognize the uncertainty of this virus.This relates to class materials because workers and companies are going to experience a loss of money.

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With two days of big declines so far this week, global stock markets appear to be pricing in a longer-term economic downturn from the coronavirus outbreak, which has now spread rapidly from the world's second-largest economy, China, to the Middle East and Europe.

One sign is that as investors start to see real prospects of a global economic slowdown, they are looking for safe havens for their money, sending the yields on U.S. government bonds down to near-record lows (and pushing up yields in recession-prone places like Italy and Greece). More worrisome is that U.S. bond yields are showing clear red flags, even more than they have flashed in recent months. Yields remain inverted-meaning returns are higher for very short-term debt compared with 10-year bonds. This is the reverse of the normal situation and a pretty reliable sign that there is a recession on the way.

The International Monetary Fund has so far only tweaked its outlook for China and the rest of the world this year due to the outbreak of the coronavirus disease now known as COVID-19, with expectations that Chinese growth will suffer early and largely be made up by the end of the year. But some other forecasters fear that the knock-on effects of near-paralysis in China-coupled with disrupted supply chains, border closures, a slowdown in tourism and travel, and jitters about the resilience of emerging markets-could hammer the global economy just as hard-hit manufacturing countries and beleaguered consumers were showing signs of confidence.

Oxford Economics, for instance, now expects the virus to knock first-quarter Chinese growth down to just 3.8 percent and to only 5.4 percent for the whole year-a big drop for a country that needs growth of about 6 percent to meet its economic and political targets. Globally, the impacts of the virus could drag global growth down to about 2.3 percent this year, the lowest level since the depths of the financial crisis, Oxford said.

Initially, many businesses, investors, and bankers expected the coronavirus outbreak to be similar to the 2003 eruption of SARS, if perhaps a bit more painful. But now that the virus has spread to the Middle East and Europe-closing big chunks of Italy's northern economic heartland and even spreading into Spain -the worry is that what began as a contained outbreak could turn into a pandemic, as the World Health Organization warned Monday.

"Stock markets are finally starting to recognize the uncertainty" after staying stubbornly resilient, said Jorge Sicilia, the chief economist of BBVA, the big Spanish bank.

The virus's impact on China has been increasingly evident since last month, with a quarantine in Hubei province, where the outbreak began, matched by similar, often voluntary quarantines in many other cities. Together with the extended Lunar New Year holiday, those restrictions have prevented millions of workers from getting back to their jobs, which in turn can mean lost paychecks for Chinese consumers, closed businesses, and disrupted supply chains with ripple effects all over the world.

While Apple, a tech firm heavily exposed to Chinese suppliers, rattled markets last week with a forecast sales decline, other less obvious companies are starting to feel the pinch. Mastercard now says it will earn less than expected due to the decline in travel, the Australian vintner Treasury Wines downgraded its forecasts due to lower Chinese consumption, and United Airlines gave up trying to offer financial guidance this year at all until the virus runs its course.

Asian countries like South Korea and Japan, which were already talking of economic emergency, are now bracing for even greater impacts. In Japan, where stock markets were closed on Monday, jittery traders sent shares tumbling on Tuesday to make up for it; meanwhile, the country is planning for more telework to avoid large gatherings and the spread of the disease. Hong Kong, which hoped to start recovering its central place as a trading hub after months of protest-related disruption, instead saw exports drop off a cliff in January-even before the worst of the new coronavirus had become apparent.

But what's new and now genuinely making markets worry is the apparent spread of the disease, which seemed as of a week ago largely under control. Iran is now battling an outbreak of the coronavirus with an already decimated economy and with public mistrust of the government at fever pitch. Travelers from Iran have now carried the virus to several other Middle Eastern countries, where experts fear fragile health systems could be overwhelmed if infection accelerates. (Iran's deputy health minister has contracted the virus.)

At the same time, fears of a global economic slowdown are driving down the price of crude oil to the low $50 range per barrel-bad news for oil-reliant government budgets in Iran, Iraq, Saudi Arabia, and other OPEC powerhouses in the region.

For Europe, the arrival of the coronavirus comes at a particularly bad time, just as struggling economies were starting to climb out of last year's doldrums and showing signs of recovery.

The growing outbreak in Italy-including the first cases in Sicily-is just another dollop of bad news for an Italian economy struggling to get back to growth. Travel restrictions in the area around Milan, the industrial center of Europe's third-largest economy, are a kidney punch for an economy already grappling with the slowdown in Germany, a high debt load, an aging population, and endemic corruption. Moody's rating agency expects the virus to tip Italy into recession this quarter.

Spain, too, is bracing for additional fallout from the virus-which had earlier led to the cancellation of the high-profile, annual mobile phone congress in Barcelona-after nearly a thousand tourists were quarantined in a hotel in the Canary Islands due to fears of infection from an Italian traveler.

In weeks past, economists figured there would be only a minimal hit to growth in fragile European economies because the effects of a slowdown in China were so indirect. Now, BBVA's Sicilia said, they are starting to tally up potentially direct impacts-closed borders and hotels, quarantined cities, and shuttered factories.

"We're still in the early phases, but this doesn't come at a good moment. It's going to hamstring the recovery a bit," Sicilia said. "If the outbreak extends, if there are travel restrictions, if people aren't working-all that goes straight into lower GDP."

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World Stock Markets Begin Betting on a Coronavirus Slowdown

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With two days of big declines so far this week, global stock markets appear to be pricing in a longer-term economic downturn from the coronavirus outbreak, which has now spread rapidly from the world's second-largest economy, China, to the Middle East and Europe.