FirstFT: Credit Rating Upgrades Hit Record Rate as US Economy Bounces Back
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Credit rating agencies are revaluing hundreds of billions of dollars in US corporate debt, in a partial reversal of downgrades at the start of the pandemic that reflects the sharp rebound in profitability in much of US businesses.
About $ 361 billion in investment grade bonds have revalued in the past two months, including a record $ 184 billion in June, according to data from Bank of America.
The rapid turnaround shows that credit rating agencies such as S&P Global, Moody’s and Fitch believe that the economic recovery boosted by the vaccine rollout has made corporate debt more manageable. It also reflects the abundant liquidity and low borrowing costs available to many companies, in part thanks to the Federal Reserve’s monetary stimulus.
Rating agencies were reprimanded after the 2008 financial crisis for giving impeccable ratings to bonds that ultimately defaulted. But during the pandemic, they quickly lowered their ratings on entire swathes of debt.
Five other articles in the news
1. The decline in Morgan Stanley trade is offset by transactions and unity of wealth The Bank of Wall Street became the latest U.S. lender to report that higher investment banking fees helped offset some of the trading slowdown as it posted higher income and profits for the second quarter.
2. More than 1,000 people are said to have disappeared in the German floods The death toll from heavy flooding in western Germany has risen to 81 and more than 1,000 residents are believed to be missing. Torrential rains caused rivers to overflow and wash down many districts in the German regions of North Rhine-Westphalia and Rhineland-Palatinate, in one of the country’s most destructive natural disasters in years.
3. “I’m not in the game” Donald Trump lashed out at General Mark Milley, Chairman of the Joint Chiefs of Staff, after several new books recounted how the senior US military official feared a “Reichstag moment” in the White House and compared Trump to Adolf Hitler as the former President refused to recognize the results of the November presidential election.
4. China snubs a top US official Beijing refused to grant Wendy Sherman, Assistant Secretary of State, a meeting with her counterpart during a planned visit to China. It would have been the first high-level engagement between the two countries since their first meeting in Alaska, which erupted into a public feud between Antony Blinken, US secretary of state, and Yang Jiechi, China’s top foreign policy official. .
5. The head of the Olympics warns against the demonstrations of athletes who “divide” Thomas Bach, president of the International Olympic Committee, warned athletes against political protests at the upcoming Tokyo games. “The podium and the medal ceremonies are not done. . . for a political demonstration or otherwise, ”he said in an interview with the Financial Times ahead of the opening ceremony next Friday.
US President Joe Biden has said he will be ready “in the next few days” to say when the we could lift its Covid-related travel ban on European countries after a meeting with German Chancellor Angela Merkel.
Canada could allow fully vaccinated Americans to enter the country by mid-August and international visitors by September, according to Prime Minister Justin Trudeau.
Los Angeles reinstates a mask mandate, requiring residents to wear face coverings indoors, regardless of their immunization status. The requirement comes into effect at 11:59 p.m. local time on Saturdays.
Scientists are rushing to find out what is causing the long Covid-19. Doctors fear “tens of thousands” of people in the UK can be affected by multiple symptoms.
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The day to come
Earnings State Street, an innovator in the exchange-traded fund market, and rival Charles Schwab are releasing their results today.
Retail sales data The US Department of Commerce is expected to release data showing retail sales fell 0.4% in June.
Biden warns of doing business in China The State Department is expected to warn U.S. companies of the growing risks of operating in Hong Kong as China exerts increased control over the financial hub.
What else do we read
A crazy walk in the cryptosphere Frank Partnoy bought a virtual horse, drove it to riches (sort of) – and got a firsthand glimpse into the delights and dangers of ‘non-fungible tokens’. His lesson ? If you like to trade collectibles, you will definitely like to trade NFTs. But be careful. Racehorses can be addictive in any form.
Notice: Crypto asset companies face a tough choice: learn to live with regulators or take their anger out, writes Adam Samson.
Apple and Klarna cut up credit cards When Apple and Goldman Sachs explore a line of business, there’s probably money in it. So the news that Goldman-backed Apple is considering adding a “buy now, pay later” feature to Apple Pay shows the financial opportunity is hitting, writes John Gapper. Buying now, paying later can be a smart innovation, if buyers use it wisely.
Russia’s rail ambitions Russia’s state-run railways are investing $ 17 billion over a decade as part of an ambitious plan that aims not only to carry passengers, but also to grab a larger chunk of the billions of dollars in goods transported annually from Asia to Europe. But the country faces fierce competition: notably from the Chinese Belt and Road Initiative.
What are we talking about when we talk about corporate culture? Workplace culture is a loose term that is best described as “the DNA” of an organization. People are hired because of it. This means that they receive the same jokes and share the same cultural references as the leaders. But it is a “mirror tocracy”, argues Annie Auerbach, and creates an echo chamber that harms the results of the company.
The worship of us Eliot Brown and Maureen Farrell of the Wall Street Journal tell the story of the excesses of the office rental group WeWork and its charismatic co-founder Adam Neumann.
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