(Bloomberg) -- Bankers have a message for America’s debt-laden companies: raise money now, because things could get a lot worse.The gradual reopening of businesses after months-long shutdowns and a pick up in manufacturing activity have given investors reason for optimism in recent weeks. But underwriters who cater to heavily indebted corporations are offering their clients a bleak preview of what may lie ahead.The long list of worries includes a new wave of coronavirus contagion in the fall, an extended period of double-digit unemployment, a spike in defaults and a slower-than-expected economic recovery as businesses around the globe adapt to the realities of prolonged social distancing.Of course, pitching bond sales to companies is part of the job description, and corporate treasurers expect nothing less from bankers whose bonuses are tied to how many deals they do. Still, the grim warnings to stockpile cash reflect how the rally that credit markets have enjoyed since the Federal Reserve took action may be obfuscating an economic picture still fraught with risks.“We are telling virtually every private equity firm and issuer out there they ought to get to market,” said Peter Toal, global co-head of fixed-income syndicate at Barclays Plc, one of the major underwriters of loans and bonds for highly leveraged companies.‘Tough Winter’The bankers’ private warnings to clients underscore the publicly visible stampede for cash across corporate America. Debt sales by blue-chip companies are running at a record pace this year, while issuance of junk bonds, which are rated below investment grade, reached almost $44 billion in May, the third-busiest month on record.The Fed’s support has even allowed many of the companies hardest hit by the coronavirus outbreak to tap markets in recent weeks. Yet borrowers that rely on junk debt are the most exposed to the ebbs and flows of credit markets, as they risk seeing their access to capital cut off when volatility spikes.Barclays is hardly the only big player in the market encouraging company executives to take advantage of today’s benign credit environment.Bankers worry that even if businesses reopen and consumers resume spending, the U.S. economy could go through a rough few quarters and underperform investors’ expectations.“If we have a tough winter and your company is not in good shape through the spring of next year, this is a good time to take care of that,” said Richard Zogheb, head of global debt capital markets at Citigroup Inc.Uber Technologies Inc. sold $1 billion of bonds last month even as it finished the first quarter with over $8 billion of cash and nearly $1 billion of short-term investments. While its business has been gutted by the coronavirus, the company had told investors that it expected to end the year with over $4 billion in cash in its worst-case scenario.Executives moved ahead with the debt raise last month partly because of concerns that as states start to reopen for business, investors could be disappointed by a languid pickup in economic activity, according to a person with knowledge of the deal.A representative for Uber declined to comment.For many companies, the focus remains squarely on making sure they have enough cash on hand to withstand a prolonged slump in revenue. But bankers are also urging companies that have already taken care of their immediate liquidity needs to refinance maturing debt and in some cases accumulate cash for investments or small acquisitions.Ardagh Group SA, one of the world’s largest producers of bottles and cans for the beverage industry, has already tapped the market three times since the pandemic took hold. Its first deal replaced short-term bank funding and beefed up its balance sheet, while the last two allowed the company to refinance existing debt at lower interest rates.Tenet Healthcare Corp., a hospital operator, sold its second bond in as many months on Tuesday to bolster cash reserves and repay existing debt. Royal Caribbean Cruises Ltd. and Univision Holdings Inc. are also selling debt again within weeks of previous offerings.Encouraging companies to come to market to repay debt also has another benefit for banks: It frees capital tied up in loans, allowing lenders to redeploy that cash elsewhere.U.S. companies borrowed hundreds of billions of dollars of short-term debt from banks beginning in early March, but many have subsequently sold bonds to repay those borrowings, allowing the lenders to make that cash available to other clients.“The bond market has been so open that a large number of our bridge loans have been refinanced” already, said Citigroup’s Zogheb. “That’s given us an opportunity to look at acquisitions.(Updates with Royal Caribbean and Univision in 16th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- U.S.USA TODAY
Visitors returning to downtown Las Vegas hotel-casinos, the first to reopen, were greeted with temperature checks, and dealers in face masks.
- PoliticsThe Guardian
The president’s appeal to his base amid protests was derided by some Christians. Others saw a victory in a world of evilNo one accuses Donald Trump of subtlety. When the US president raised a Bible overhead on Monday evening outside St John’s Episcopal church in Washington DC, the sign was unmistakable: an appeal to his white evangelical base for loyalty, as protests and riots roared across America.Not every Christian answered the call. The Rev Gini Gerbasi, an Episcopal priest, said police used teargas to drive her and others from St John’s before Trump’s appearance. “They turned holy ground into a battleground,” she told Religion News Service.But many of Trump’s evangelical supporters, far from Washingtons political stage, saw the move as a victory in a world rife with evil.“My whole family was flabbergasted,” said Benjamin Horbowy, 37.The Horbowys had gathered in Tallahassee, Florida, to watch live as Trump walked from the White House to St John’s. “My mother just shouted out, ‘God give him strength! He’s doing a Jericho walk!’”A Jericho walk, in some evangelical circles, refers to the biblical book of Joshua, where God commanded the Israelites to walk seven times around the opposing city of Jericho, whose walls then came crashing down.Horbowy already supported Trump politically – he heads the local chapter of a pro- Trump motorcycle club and is campaigning for a seat in Florida’s state senate – but when Trump lifted the Bible, Horbowy and his family felt overcome spiritually.“My mother started crying. She comes from Pentecostal background, and she started speaking in tongues. I haven’t heard her speak in tongues in years,” he said. “I thought, look at my president! He’s establishing the Lord’s kingdom in the world.”Did he feel that conflicted with the Gospel of John, where Jesus said “my kingdom is not of this world”?“Well,” Horbowy said, “that’s a philosophical question.”After watching Trump’s gesture, Horbowy changed his Facebook profile photo to one of Trump outside St John’s, with added rays of light emanating from the Bible. “It was the coolest thing he could do. What more could he do, wear blue jeans and ride in on a horse?” he said.The catalyst for the protests was the killing of 46-year-old George Floyd by Minneapolis police. Asked about that, Horbowy said, “There’s a Bible verse that says we shouldn’t talk about evil things. We can just say, ‘There’s evil’ and move on.”He couldn’t remember the exact verse, he said.So how did devotees like Horbowy become such a potent force that Trump would signal them in his hour of need? One answer lies in their relationship with Trump. They have given him their fervent support at the ballot box and in turn they have seen a conservative takeover of the courts and an assault on reproductive and LGBTQ+ rights.Their power and worldview is a culmination of trends that started decades ago, according to John Fea, a history professor at Messiah College and himself an evangelical Christian. “It’s rooted in fear,” he said.In the 1980s, Fea said, several forces converged to alarm white Christians: a removal of official prayer and Bible readings from schools, an influx of immigrants from Asia and the Middle East, and the final desegregation of schools like Bob Jones University.“So came the emergence of the Christian right,” Fea said.Figures like Jerry Falwell and James Dobson started wielding political influence in a new way, followed today by a new generation that includes Franklin Graham and the Dallas pastor Robert Jeffress, one of Trump’s leading evangelical defenders. “What seems to be missing in much of the coverage is that a group of protesters had tried to burn that church to the ground 24 hours earlier,” Jeffress said. Jeffress sees no conflict between Trump’s behavior and the Bible he held up on Monday evening. “You mean, does he pretend to be perfectly pious?” he said. “No.”Fea calls faith leaders like Jeffress “court evangelicals”.“Trump has these people around him,” Fea said. “They’re telling him, ‘You need to get your evangelical base on board.People once concerned with piety, Fea said, now crave “an exercise in pure political power”, and the Bible is no longer a spiritual weapon but an earthly one.When Trump describes himself as a “law and order” president and holds aloft a Bible, he conflates which law he will enforce, and whose order will follow. In a short speech before the walk to St John’s, Trump said he would “dominate the streets”. That is the “kingdom in the world” Horbowy referenced.“I believe it’s like Ephesians 6:10 through 19,” Horbowy said from Florida. “I believe this is a president who wears the full armor of God.”But one of those verses – verse 12 – says explicitly that “we do not wrestle against flesh and blood”, but against spiritual enemies.“Well,” Horbowy said. “He’s fearless.”
Aaron Rodgers used social media to call for solidarity following comments from New Orleans Saints counterpart Drew Brees.
Get ready for a shopping spree because Amazon just announced the fashion sale of the summer. While Amazon Prime Day — considered the Black Friday of July — is typically held in the summer, it was pushed back in light of the coronavirus pandemic. Luckily, this new sale should hold you over until September, which […]
- WorldThe National Interest
It had a large impact on Japan's defeat and the post-war settlement.
Fifteen U.S. airlines were granted final government approval on Wednesday to temporarily halt service to 75 domestic airports as travel demand has been crushed due to the coronavirus pandemic. The U.S. Transportation Department said all airports would continue to be served by at least one air carrier. The U.S. airline industry has been awarded $25 billion in government payroll assistance grants to help weather the pandemic.