Bloomberg reports that at least seven new-issue CLOs are currently marketing, with January new-issue volume at nearly $9 billion. The rise in sales comes as risk premiums for new transactions have tightened to pre-pandemic levels, prompting managers to market new deals at favorable terms and refinance and reset existing bonds at cheaper costs. [Bloomberg; Feb. 5, 2021]
The International Monetary Fund released a World Economic Outlook Update for January 2021, which reveals that despite the historic recession brought about by the COVID pandemic and related government-ordered lockdowns, 2020 bankruptcies declined over 25% relative to past years due to exceptional policy measures. Gina Gopinath, Chief Economist of the International Monetary Fund, notes that “[p]olicy makers should prepare for possible ‘pent-up bankruptcies.’” [World Economic Outlook Update; Jan. 2021]
Forbes reports that China-based coffee chain Luckin Coffee, once considered a major Starbucks competitor, filed for bankruptcy under chapter 15. Luckin Coffee had been slowly recovering, following a delisting from Nasdaq after it was discovered that the company’s prior management inflated sales figures, before COVID hit. [Forbes; Feb. 5, 2021]
Reuters discusses disclosure requirements in connection with potentially distressed and bankrupt companies amid social-media-fueled retail trading frenzies, analyzing the dilemma that Hertz and certain similarly-situated companies face. [Reuters; Feb. 8, 2021]