Bank of America Corp., which tops the league table for U.S. leveraged-loan issuance, is watching that market closely for signs of stress.
“The real concern is: Is there too much leverage in the system in certain companies, and if they have trouble, will that impact the economy?” Chief Executive Officer Brian Moynihan said in a Bloomberg Television interview. “We get concerned about that because it usually reverberates back” to banks.
The Charlotte, North Carolina-based lender manages that risk by focusing on debt-underwriting terms, client selection and diversifying its loan book, Moynihan said. In June, he warned that potential “carnage” could ensue in the market that his bank has dominated for a decade.
Bank of America’s market share in U.S. leveraged-loan issuance has remained broadly stable at nearly 11%, even as issuance fell 33% on year. That comes at a time when commentators such as Fitch Ratings have flagged more loans of concern and the potential for an uptick in defaults going forward.
Direct lenders such as hedge funds and buyout firms are snatching business away from syndicated-debt players. Alternative asset managers have made inroads into the US$1.2 trillion leveraged-loan market by often offering speedier financing and more comprehensive structures than the public markets.
As private credit shops have also amassed massive amounts of capital — with US$296 billion of dry powder globally, according to London-based research firm Preqin — they’ve been able to finance larger and larger deals.
“For a given deal that they might do a structure, that might be a competitor, but they’re major clients of ours too,” Moynihan said. “On a given deal they may do a tranche of financing that we’d have done, but typically they’re doing a different tranche, honestly, and so we’re more focused on the shorter-term revolvers.”
Here are other takeaways from the interview:
Moynihan is pleased with the bank’s trading performance, alongside its efforts to revamp the investment bank.
The company plans to boost its ranks of relationship managers by 2%-3%.
He’s still optimistic about the U.S. economy, driven by strong consumer spending and a robust labor market.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
