Covenants

LIBOR Pains

LIBOR is a benchmark reference rate (which explains why some banks were so eager to manipulate it). The pricing of all kinds of floating-rate debt is tied to it (corporate loans, mortgages, student loans, credit card debt, and assorted derivatives, such as currency and interest rate swaps, etc.). That has now become a problem.

U.S. Startups Increasingly Tapping Debt Markets As VCs Pullback From Egregious Valuations

After investing nearly $80 billion into startups in 2015, Venture Capitalists, having grown slightly weary of the $1 billion valuations being handed out like candy to every 22 year old with an app that can replace your face with that of panda, have pulled back a bit in 2016 which has opened up a great "opportunity" for Silicon Valley debt lenders.

Surge In Online Loan Defaults Sends Shockwaves Through The Industry

In a page taken right out of the CDO book of 2007, delinquencies and defaults on at least four different sets of bonds have reached the "triggers" points. Breaching those levels would force lenders or underwriters to start paying down the bonds early, redirecting cash from other uses such as lending and organic growth. According to Bloomberg, one company, Avant Inc. and its underwriters, will have to begin to repay three of its asset-backed notes, which have all breached trigger levels.

Is The US On The Verge Of Mass Race Riots?

Ferguson, Baltimore, Ferguson (again), Milwaukee, Charlotte. Much has been made by the media of the recent riots that have taken place across America. Which begs the question: Are these riots passing occurrences or, like a series of smaller seismic events, a forewarning of much larger mass civil unrest to come? For the answers, we take a quick trip back in time.

Incompetent But Not Weak: "The Fed Doesn't Know Whether To Shit Or Go Blind"

The outlook for the US economy is deteriorating, yet the Fed is trying to raise overnight rates to keep unseen inflation from rising. Success in its strategy could force consumption lower, unemployment higher, and exacerbate real output contraction. The market, however, should not underestimate the Fed’s power based on its apparent incompetence.

This Has Never Happened Outside Of A Recession

The Fed's latest Senior Loan Officer Survey for July 2016 showed that banks continued to tighten standards on commercial loans in 2016 for both commercial and industrial (C&I) and commercial real estate (CRE). This was the fourth straight quarter of tighter standards: something that has never happened outside of a recession.