Moneymoney

Mon Dec 28, 2015, 01:19 PM

Higher interest rates are about to hit companies - just when many are ill prepared to handle them.

The Federal Reserve this month took interest rates up for the first time in nearly a decade - ending the days of free money. It might take a few years for higher rates to hit companies - as they look to refinance debt. But the troubling part is many companies aren't in great shape to eat the higher costs.

The number of companies with the lowest credit ratings and negative outlooks jumped to 195 in December, the highest level since March 2010, says Standard & Poor's. The biggest culprit for the jump in these so-called "weakest links" is the oil and gas sector, which accounts for 34 of them. But financial companies are close behind, representing 33 of the weakest links, says S&P.

The bond markets are starting to factor in the dangerous combination of rising interest rates as well as profit weakness in several sectors. The U.S. distress ratio - a measure of the amount of risk the market has priced into bonds - hit 20.1% in November, which is the highest level since hitting 23.5% in September 2009, says S&P. That's an onerous indicator since September 2009 takes investors back to the last recession.

The largest percentage of the distressed debt - 37% - is concentrated in the oil and gas sector. The sector is getting hammered by falling commodity prices. But metals, mining and steel is hurting too, with a 72% distress ratio. Time will tell if the debt market can handle this shock.

http://www.usatoday.com/story/money/markets/2015/12/28/debt-distress-level-recession/77882786/

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Reply Higher interest rates are about to hit companies - just when many are ill prepared to handle them. (Original post)
Gamle-ged Dec 2015 OP
exindy Dec 2015 #1
Gamle-ged Dec 2015 #2
Appalachian Man Dec 2015 #3
nolidad Dec 2015 #4
exindy Dec 2015 #5
nolidad Dec 2015 #6
exindy Dec 2015 #7
nolidad Dec 2015 #8

Response to Gamle-ged (Original post)

Mon Dec 28, 2015, 01:39 PM

1. Just a couple years ago the oil and gas sector had record earnings

maybe they should have put a little aside.

They're having a problem doing a refi? That is a tremendous shame.

Maybe they need a better economic plan.

Should we take up a collection? You know, many of us in the middle class have been doing so well during the last 2 decades.

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Response to exindy (Reply #1)

Mon Dec 28, 2015, 02:41 PM

2. Eventually, a collection will be taken up. Do you use energy? Thanks in advance...

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Response to exindy (Reply #1)

Mon Dec 28, 2015, 02:54 PM

3. Good! Now they know how college students feel who are prevented...

by law from refinancing to a lower rate.

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Response to exindy (Reply #1)

Mon Dec 28, 2015, 07:51 PM

4. Oh the big boys are doing fine enough

It was all the start ups for shale oil, fracking and other ventures that have gone out of business!

Remember the fuel industry makes 8% profit (or there abouts on average).

They have little to no control of prices. It is the traders, speculators and drillers like Saudi Arabia who have control fo the prices.

In America it takes about $36 /barrel for oil to be profitable. Shale and fracking about $65/barrel.

In the ME they make a profit after about $12.

Seems to me the only thing you are happy about is that when the oil market collapses- thousands of middle class jobs disappear because we cannot produce oil at a loss for long.

And before you go off about all the profits the oil companies made, remember this: They are publicly traded companies which means that after they pay all the expenses all the rest of the profits go to the shareholders
Which means tens of millions of dollars go to city and state pension funds because of all the generous benefits promised that can't be paid for in any other means than investing in hopes of making big profits form all these Wall street money churners.

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Response to nolidad (Reply #4)

Mon Dec 28, 2015, 08:21 PM

5. I know -- it's a real travesty.

But you know what? When one company fails because they have a faulty business model, the funny thing is that its place is taken by another... if there's a market for the product.

F'em.

We, the people, owe them nothing. We brought them into existence, we'll take them out. Don't mean nothing to us, we'll make another just like them.

Go light a candle for them.

The rest of your garbage is garbage.

F' the shareholders, too. Trying to justify their greedy existence by pointing at pensions is an even bigger crock o' shit.

There aren't any pensions to speak of anymore. The majority of people in this country don't own one share of stock.

Begone!

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Response to exindy (Reply #5)

Tue Dec 29, 2015, 05:50 AM

6. Ignorance is not bliss.

http://www.gallup.com/poll/182816/little-change-percentage-americans-invested-market.aspx.

Through company pensions, state and municipal pensions, IRA's 401 K's over half of Americans are invested in teh stock market.

yeah the fat cats will make most of the money, but in 2008 millions lost their pensions(or large chunks of them) because states, towns and companies had pensions invested in the market.


The stock market no longer resembles what is was intended to do, but also millions are dependent on it to keep their pensions alive. It is an ugly thing our greed has created.

We, the people, owe them nothing. We brought them into existence, we'll take them out. Don't mean nothing to us, we'll make another just like them.

So then you should not shed a tear when they make exorbitant profits, means nothing to you! Just take 'em out!

R U really that bitter????

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Response to nolidad (Reply #6)

Tue Dec 29, 2015, 08:22 AM

7. Just pick out the words you like.

Don't bother reading them all.

A company that can only survive due to largess has a bad business model.

That's not a hard concept.

If a business fails and does because of its model rather than the need for its product, the need for the product will ensure that another company will fill the void.

The fact is that this article is a crock. It is pointing at one situation and trying to make the case for a different situation. This is a propaganda piece to make a case against the fed raising the interest rate on loans it makes. That free money that the recipients find so useful because they can then turn around and charge interest. Those end-product companies aren't in this category.

The recipients don't have to compete based on their qualities. These are the true fat cats. The ones who played this game and had to be bailed out.

This free money is the voodoo economics. It's pure trickledown in its most golden form.

You bought the bullshit. You're the one who won't live up to the conservative principles --- the sink or swim. Make it on your own. Compete.

The stock market will be fine. The 401s (as small as they are) will be fine. In fact, in the long run they'll be better because savings rates will go up. The weak will have failed leaving a stronger herd.

Bitter has nothing to do with it.

(added) and you can skip with the personal insults.

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Response to exindy (Reply #7)

Tue Dec 29, 2015, 04:44 PM

8. Your continued ignorance is still not bliss.

If a business fails and does because of its model rather than the need for its product, the need for the product will ensure that another company will fill the void.

I couldn't agree more. But in the case of oil, it is the big middle east producers (run by govt) who are forcing the price of oil down by intentional overproduction to keep their market share and drive many of our new businesses bankrupt in the oil industry. IOW intentional manipulation of the markets.


The fact is that this article is a crock. It is pointing at one situation and trying to make the case for a different situation. This is a propaganda piece to make a case against the fed raising the interest rate on loans it makes. That free money that the recipients find so useful because they can then turn around and charge interest. Those end-product companies aren't in this category.

I don't know how in the world you can come to that conclusion. It is just showing how you were dead wrong about people not being invested in the stock market. All the rest of your remarks here appear to be gibberish.Just for the record, most conservatives favor a real interest rate and not this phony one. It is the liberal side of the aisle decrying interest rate increases.



The recipients don't have to compete based on their qualities. These are the true fat cats. The ones who played this game and had to be bailed out

We weren't talking about banks. This is a throw in by you for whatever reason. . I was with the conservatives ini 2008-09 and would have voted to let the banks fail.


You bought the bullshit. You're the one who won't live up to the conservative principles --- the sink or swim. Make it on your own. Compete

I do all the time. I am just amazed at the deep level of hate you have for your fellow humans.

The stock market will be fine. The 401s (as small as they are) will be fine. In fact, in the long run they'll be better because savings rates will go up. The weak will have failed leaving a stronger herd

Well I am glad you think $2.8 trillion . in 401k's is small

https://www.ici.org/policy/retirement/plan/401k/faqs_401k

This free money is the voodoo economics. It's pure trickledown in its most golden form.

That is why I have been against the bailout since the get go. and why I also was against all the QE's and artificial low rates. Govt. manipulating of the economy smacks of socialism and totalitarian rule.

You bought the bullshit.

Seems the only BS here is your assumptions of what I think.

(added) and you can skip with the personal insults.

What insult? that I asked if you were vewry bitter? You certainly present it in your writing with all your invectives.

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Moneymoney