• $1 Trillion of Corporate Bonds Today, Downgrades Tomorrow

    $1 Trillion of Corporate Bonds Today, Downgrades Tomorrow

    (Bloomberg Opinion) -- The amount of new debt issued this year in the U.S. investment-grade corporate bond market will reach $1 trillion today, by far the fastest pace in history. The implications of that milestone depend on how you look at it.For businesses that had been ravaged by the coronavirus pandemic and the ensuing nationwide lockdowns, access to capital markets was a lifeline to get through the worst of the economic collapse. Sure, Carnival Corp. had to offer interest rates like a junk-rated borrower and Boeing Co. needed to include a so-called coupon step-up provision to offset jitters that it could lose its investment grades. But, in the words of Federal Reserve Chair Jerome Powell, these deals avoided turning “liquidity problems into solvency problems” for brand-name American companies.It’s worth remembering that until the Fed stepped in with extraordinary support for credit markets, averting widespread failures was far from guaranteed. Investors pulled a staggering $35.6 billion and $38 billion from investment-grade funds in the weeks ended March 18 and March 25, respectively. Before 2020, the previous record was $5.1 billion of outflows. I wrote on March 19 that bond markets were veering into a vicious cycle that could get ugly in a hurry — four days later, the Fed announced what would end up becoming a $750 billion backstop for corporate America.Now, the Fed hasn’t actually had to buy any individual bonds yet, a fact that Powell seems proud to share. “We may have to be lending money to those companies, but even better, they can borrow themselves now, and a lot of that has been happening and that’s a really good thing,” he said during May 19 testimony before the Senate Banking Committee.Most people would probably agree with that assessment, at least for the immediate future as the country grapples with restarting the world’s largest economy. But what about the longer-term view?Here, the rampant borrowing paints a more sobering picture. As of late April, 1,287 issuers worldwide rated between AAA and B- by S&P Global Ratings were considered at risk of a potential downgrade, up from 860 in March and 649 in February. That surpasses the previous all-time high set in 2009. “Generally, we expect heavy credit erosion in coming months as issuers, especially those in the lower-rated spectrum come under heavy fire from poor earnings, continued difficulties in managing cost structures, and market volatility creating limited funding opportunities,” said Sudeep Kesh, head of S&P’s credit markets research.That’s bad enough, but doesn’t even strike at the heart of the issue. Last year was supposed to be the beginning of a broad “debt diet” among companies that borrowed huge sums to finance mergers and acquisitions during the longest expansion in U.S. history. That didn’t end up taking place on a wide scale. Even a success story like AT&T Inc., which made headway in trimming its debt stack, still found itself back in the bond market recently, borrowing $12.5 billion on May 21 in what was the biggest deal since Boeing’s $25 billion blockbuster offering.When it comes to companies directly impacted by the coronavirus pandemic or structural changes to their industries, the “big three” of S&P, Moody’s Investors Service and Fitch Ratings haven’t shied away from taking action. Ford Motor Co., Kraft Heinz Co., Macy’s Inc. and Occidental Petroleum Corp. are just a few of the “fallen angels” that lost their investment grades earlier this year.The rating companies haven’t been quite as keen to react to high leverage metrics. I frequently refer back to this feature from Bloomberg News’s Molly Smith and Christopher Cannon, which found that of the 50 biggest corporate acquisitions in the five years through October 2018, more than half of the acquiring companies increased their leverage to a level that would seemingly merit a junk rating but remained investment grade on the assumption that they’d take that leverage down in the coming years. Those expectations seemed ambitious in 2018, when the economy was seemingly invincible. Now, no one can truly expect companies to focus on right-sizing their debt. Corporate leaders are rightfully eager to raise cash to get to the other side of the pandemic, especially with all-in yields not far off from record lows. The vast majority of the $1 trillion in borrowing so far this year was by no means imprudent.In the years ahead, however, the overhang from this issuance spree will inevitably weigh down credit ratings. A company with more debt presents a greater risk of missed interest payments than if it had fewer fixed obligations. Fortunately, for much of the previous expansion, firms had no issue finding investors willing to buy their long-term securities. That practice of rolling over debt and extending maturities might very well be the norm in the months and years ahead, too. Still, if the first five months of 2020 are any indication, investment-grade bondholders will have to get comfortable with even more bloated balance sheets and the prospect of further credit downgrades. For better or worse, with the confidence that the Fed has their back, that seems like a risk investors are willing to take.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Caterpillar (CAT) Up 2% Since Last Earnings Report: Can It Continue?

    Caterpillar (CAT) Up 2% Since Last Earnings Report: Can It Continue?

    Caterpillar (CAT) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

  • ConocoPhillips Completes Sale of Interests in Australia-West
    Business Wire

    ConocoPhillips Completes Sale of Interests in Australia-West

    ConocoPhillips (NYSE: COP) today announced the completion of the sale of its subsidiaries that hold its Australia-West assets and operations to Santos. The total consideration for the sale is unchanged; however, in connection with the closing, ConocoPhillips and Santos agreed to restructure the payments such that $125 million of the originally announced $1.39 billion upfront cash payment would be allocated toward a payment due upon final investment decision of the proposed Barossa development project. This brings the total due to ConocoPhillips upon a final investment decision to $200 million.

  • Bloomberg

    Chevron’s Investors Defy Board in Demanding Climate Disclosures

    (Bloomberg) -- In a rare move against Chevron Corp.’s board, shareholders of the U.S. oil giant are calling on the company to disclose lobbying efforts and ensure that they support international goals to combat global warming.The proposal was the only one where a majority of Chevron’s investors diverged from the board’s recommendations in an annual meeting held virtually Wednesday. The matter was brought by BNP Paribas Asset Management, which has stepped up efforts in recent years to help further the international Paris Agreement on climate change. BlackRock Inc., Chevron’s second-biggest shareholder, also backed the measure.The vote comes as the world’s oil giants are already reeling over a pandemic-fueled market rout, while also facing increasing pressure to curb greenhouse-gas emissions and contribute more to the fight against climate change.U.S. oil majors Chevron and Exxon Mobil Corp. have noticeably lagged behind their European counterparts in making carbon-cutting pledges. BP Plc and Royal Dutch Shell Plc have both committed to becoming carbon neutral by 2050 -- a move that Chevron’s chief recently called “aspirational” and Exxon’s described as nothing more than a “beauty competition.”Though America’s two biggest oil companies say they support the goals of the Paris accord, some investors want reassurance that they’re not funding trade organizations that promote policies to the contrary.“Climate issues are so central to the work of these organizations that it’s hard not to be concerned that there’s the potential for misalignment,” said Jonathan Bailey, head of ESG investing at Neuberger Berman, which voted for the proposal. “This will also help accelerate clearer activities from the organizations they support.”Chevron’s board had recommended investors vote against the proposal, saying that it already made transparent disclosures of its lobbying activities. The defeat -- with a preliminary count showing 53% of investors voting in favor of the proposal -- means Chevron will be required for the first time to issue a report detailing how those activities align or not with climate goals.The result “is a real rebuke to Chevron and a wake-up call to the board,” said Kathy Mulvey, a campaign director at the Union of Concerned Scientists. “Companies must back up their statements with consistent action.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Exclusive: Chevron to cut up to 15% of staff amid restructuring

    Exclusive: Chevron to cut up to 15% of staff amid restructuring

    The oil producer previously disclosed a 30% reduction in its 2020 spending and some voluntary job cuts amid this year's sharp drop in oil prices and lower demand for oil and gas due to the COVID-19 pandemic. Chevron has been widely seen as the standard bearer of financial discipline in the oil industry and was among the first to make significant budget cuts as oil demand plummeted. Last year, it abandoned a takeover bid for Anadarko Petroleum Corp rather than get into a bidding war with Occidental Petroleum Corp <OXY.N>.

  • Greif (GEF) Reports Next Week: What You Should Expect

    Greif (GEF) Reports Next Week: What You Should Expect

    Greif (GEF) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

  • Business Wire

    Chevron Discusses Business Operations at Annual Stockholders Meeting

    Chevron Corporation (NYSE: CVX) today provided an overview of the company’s work to respond to the COVID-19 pandemic at its 2020 annual meeting of stockholders. This year’s meeting was virtual in place of an in-person event due to safety concerns related to the pandemic.

  • Oil & Gas Stock Roundup: Halliburton Lowers Dividend, National Oilwell Stops Paying

    Oil & Gas Stock Roundup: Halliburton Lowers Dividend, National Oilwell Stops Paying

    Halliburton (HAL) told investors it is cutting its dividend by 75%, while National Oilwell Varco (NOV) board suspended the quarterly payout indefinitely to retain cash in the business.

  • Garmin® unveils new series of oversized dēzl™ truck navigators
    Business Wire

    Garmin® unveils new series of oversized dēzl™ truck navigators

    Garmin International, Inc., a unit of Garmin Ltd. (NASDAQ: GRMN), today announced the oversized dēzl OTR700/800/1000 GPS truck navigators. For a clear view of the road ahead, the new dēzl series features a 7-, 8-, or an extra-large 10-inch display option that can be easily switched from traditional landscape to portrait mode.1 In addition to large, easy-to-read HD touchscreens, the new dēzl series offers industry-best load-to-dock guidance, popular truck routing, and custom truck routing2 for the size and weight of a driver’s rig.

  • Moody's

    Tupperware Brands Corporation -- Moody's downgrades Tupperware's CFR to Caa3; debt repurchase likely a distressed exchange

    Moody's Investors Service, ("Moody's") today downgraded Tupperware Brands Corporation's ("Tupperware") Corporate Family Rating (CFR) to Caa3 from B3, its Probability of Default Rating to Caa3-PD from B3-PD and its senior unsecured notes rating to Ca from Caa2. Bond investors that tender after June 8 and by June 22 would receive $420 for $1,000 of principal.

  • GuruFocus.com

    2 Stocks to Watch Thursday

    Workday and HP move on financial results Continue reading...

  • MarketWatch

    Dow's 100-point fall led by losses for shares of Walt Disney, Goldman Sachs

    DOW UPDATE Shares of Walt Disney and Goldman Sachs are trading lower Thursday afternoon, dragging the Dow Jones Industrial Average into negative territory. Shares of Walt Disney (DIS) and Goldman Sachs (GS) are contributing to the index's intraday decline, as the Dow (DJIA) was most recently trading 103 points (0.

  • Reuters

    Flurry of U.S. crude export fixtures offers glimmer of hope

    A flurry of tentative bookings to export U.S. crude oil from the Gulf Coast suggests demand is edging up after the coronavirus slammed energy consumption worldwide. BP, Trafigura and Equinor have all tentatively fixed vessels this past week to carry U.S. crude to global destinations over the coming month, according to Refinitiv Eikon data and shipping sources. Commodities merchant Trafigura and Occidental Petroleum are among companies looking to book vessels to ship crude from the U.S. Gulf Coast to Asia, one shipbroker said.

  • Carl Icahn Takes Over $1.6 Billion Loss on Embattled Hertz

    Carl Icahn Takes Over $1.6 Billion Loss on Embattled Hertz

    Billionaire investor exits position as car rental company files for Chapter 11 bankruptcy Continue reading...

  • 8 Stocks Diamond Hill Capital Continues to Buy

    8 Stocks Diamond Hill Capital Continues to Buy

    Charles Schwab makes the list Continue reading...

  • Thomson Reuters StreetEvents

    Edited Transcript of SJI earnings conference call or presentation 7-May-20 3:00pm GMT

    Q1 2020 South Jersey Industries Inc Earnings Call

  • New Strong Sell Stocks for May 28th

    New Strong Sell Stocks for May 28th

    Here are 5 stocks added to the Zacks Rank 5 (Strong Sell) List today

  • Forget Oil Prices, It's Time to Buy ExxonMobil and Chevron

    Forget Oil Prices, It's Time to Buy ExxonMobil and Chevron

    With their fully integrated models, ExxonMobil (XOM) and Chevron (CVX) are the ones that are best in adapting their business to the prevailing scenario.

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