Commercial lending

More details have emerged about the damage the coronavirus pandemic is inflicting on the hospitality industry. One servicer alone has received 2,000 workout requests in the past month.

Rising default levels have produced strain on many collateralized loan obligations, many of which are now approaching breaches of covenant tests on minimum weighted-average ratings factors and maximum holdings of triple-C rated loan assets.

The central bank and other agencies have come under pressure to be transparent about their use of funds authorized by the recent pandemic rescue law.

The Distressed Credit Opportunities Fund III money pool, dubbed Disco III, will target leveraged loans, high-yield bonds and collateralized loan obligations.

The program, created in response to the 2008 financial crisis, generated $19 billion in small-business loans. It could be used as a viable path out of the coronavirus pandemic.

Instead of just seeking out distressed situations, the Dislocation Opportunities Fund has a wide mandate to buy corporate and asset-backed debt.

The fund will be similar to the first iteration, which gathered $2.4 billion last year and focused on lending to family- and entrepreneur-owned businesses.

The Small Business Administration stopped approving loans when the Paycheck Protection Program hit its cap.

Legislation announced Wednesday would allow credit unions to make coronavirus relief loans to businesses without fear of bumping up against the member business lending cap.

Analysts and ratings companies are sounding alarms as a number of BDCs rush to shore up finances, or throw lifelines to their heavily indebted borrowers.