Tags: banking system stress | credit | defaults | bank of america

Bank Stress to Lead to Tighter Lending, Defaults: BofA

Bank Stress to Lead to Tighter Lending, Defaults: BofA

A landmark statues outside the Federal Reserve Bank of Kansas City (Dreamstime)

Wednesday, 26 April 2023 08:37 AM EDT

Bank stress will likely be limited to a small number of banks but lead to tighter lending conditions and a pick-up in corporate defaults, a Bank of America April credit investor survey released Wednesday showed.

The gap between high-yield bonds and government debt has tightened on 63% of days so far in 2023, an all-time record, signaling that credit markets are faring well in face of recent market turmoil, BofA said.

The biggest share of respondents to its latest survey, some 36%, said they expected bank stress to remain confined to small banks with challenged business models, with the United States more vulnerable than Europe given different regulatory supervisions.

However, over 20% said they believed that a credit crunch resulting from the bank stress would lead to a noticeable pick-up in corporate defaults.

UK business insolvencies surged to almost 2,500 in March, the survey noted.

As banks may withdraw from lending to high-risk assets, credit investors did not believe that private credit markets would step in and replace it.

© 2024 Thomson/Reuters. All rights reserved.


StreetTalk
Bank stress will likely be limited to a small number of banks but lead to tighter lending conditions and a pick-up in corporate defaults, a Bank of America April credit investor survey released Wednesday showed.
banking system stress, credit, defaults, bank of america
169
2023-37-26
Wednesday, 26 April 2023 08:37 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved