Investments

The credit watch involves single-borrower securitizations of commercial mortgages for high-priced resorts in Florida and Hawaii.

Oaktree Capital Management LLC is planning a new distressed debt fund as recent credit market turmoil throws up investment opportunities.

While collapsing market prices do not present immediate worries for CLO managers, the prospect of future downgrades and defaults becomes more problematic.

A large percentage of Institutional investors lack confidence in the U.S. government’s ability to contain and eradicate the coronavirus outbreak. But few have plans to pull capital out of specific geographic regions due to the pandemic.

The lowest tier of investment-grade companies are growing vulnerable to downgrades to high-yield status - a designation that could drive up their borrowing costs and set off a wave of selling from investors who aren’t permitted to hold such low-quality debt.

Prices for major term loans issued by operators such as Marriott International, Hilton Worldwide and Caesars Entertainment have fallen in recent weeks as investors grow worried about the impact of the COVID-19 outbreak on global tourist and business travel.

Banks may be protected from a direct hit, but they have invested in vehicles that include such loans, potentially exposing them to defaults.

If JPMorgan, Credit Suisse and Macquarie Group aren’t able to find enough takers of bonds and loans funding El Dorado Resorts' acquisition of Caesar's Entertainment, they may have little choice but to offer the debt at a steep discount.

Asset manager PGIM Inc. is looking to at least triple its investments in the growing direct lending market where it wants to compete with banks to fund mid-size companies outside of the buyout space.

Ample access to cash and debt, along with strong diversification strategies built into investment portfolios, will help asset managers and junk-rated corporate borrowers absorb any near-term substantial economic headwinds, according to Fitch Ratings.