Bank of America is not waiting for the onset of a recession due to the bankruptcy of oil companies
These fears are groundless, says economist Bank of America Merrill Lynch, Michel Mayer.
Concerns that the bankruptcy of oil companies may trigger the onset of the recession in the United States are groundless, says economist Bank of America Merrill Lynch, Michel Mayer.
It is important to note that if the number of defaults is growing because of the situation in the economy itself, their influence on it is quite limited – quoted by Business Insider Meyer.
Meyer cites the example of a hypothetical mid-sized companies:. Let’s say it 600 thousand employees, and, for example, half of them will become unemployed within a year (it draws attention to the fact that bankruptcy does not necessarily lead to liquidation of the company, but often its restructuring ) – this corresponds to a reduction of 25 thousand jobs a month.. However, keep in mind that a considerable part of these reductions have already taken place and has been reflected in the statistics, not too reflected on the state of the economy.
oil companies, the threat of bankruptcy is not reflected in the volume of loans granted by banks.
Although it is too early to judge, but so far there is no evidence of deterioration in bank lending dynamics – emphasizes Meier.
According to portfolio manager Mark Durbiano of Federated Investments, concerns about the impact of defaults oil companies on the economy expressed in the active sale of high-yield bonds since the beginning of the year, but in recent weeks the dynamics of these papers shows that the risks are seen as declining.
“The quality of corporate loans is high, the US economy is strong, there is no reason to think that something is about to change,” – emphasizes Durbiano.
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