All articles tagged with #credit crisis
Investors are concerned about US banks following allegations of fraudulent corporate lending linked to Cantor Fitzgerald, leading to significant market declines and a loss of confidence in credit markets, although some major banks remain resilient and see the situation as isolated incidents.
Fund managers are increasingly concerned that trouble in the commercial real estate sector could lead to a credit crisis in the U.S., with the potential for a systemic credit event identified as a top risk to markets. About $1.5 trillion in commercial mortgage debt is due by the end of 2025, and steeper borrowing costs, tighter credit conditions, and declining property values due to remote work have increased the risk of default. Small and regional banks, which hold about 80% of the sector's outstanding debt, are at the center of the potential upheaval, with concerns that lending standards could become significantly more restrictive. Treasury Secretary Janet Yellen has downplayed the potential impact on the banking system, stating that while there may be additional bank stress and financial losses, it is not expected to pose a systemic risk.
Apollo Commercial Real Estate Finance (ARI) is a commercial mortgage REIT that originates and holds its own mortgages, providing it with direct exposure to the performance of the loans. Unlike collateralized mortgage-backed securities (CMBS) loans, where the originator and servicer have little incentive to work with troubled borrowers, ARI has the motivation to find profitable solutions or take possession of the property and operate it. Despite some defaults in the commercial real estate sector, ARI has been able to cover its dividend and maintain high earnings due to its ability to navigate the market and acquire properties at discounted prices. With a 14% yield and a strong financial position, ARI presents an opportunity for investors seeking income in the commercial real estate sector.
Larry McDonald, the founder of The Bear Traps Report, is warning that the stock market is about to crash, citing his "Lehman systemic risk indicators" that are flashing warning signs. He believes investors are ignoring the risk of a "rolling credit crisis" after the failure of several banks and focusing too much on new technologies. While this is not a Lehman event that will cause a devastating recession, a sharp drawdown is on its way, he warned.
Larry McDonald, the founder of The Bear Traps Report and a former Lehman Brothers executive, is warning that a stock market crash is imminent. He has developed 21 Lehman systemic risk indicators, which are all flashing warning signs. McDonald believes investors are ignoring the risk of a "rolling credit crisis" and focusing too much on new technologies like AI and robotics. He warns that banks' issues are beginning to spread to the commercial real estate market and could infect other sectors of the economy as the Fed raises rates to fight inflation. While this is not a Lehman event, a sharp drawdown is on its way, he warns.
Citigroup CEO, Jane Fraser, has expressed confidence in the US banking system after a series of closures rattled investors and fueled turmoil in global financial markets. Fraser stated that the banking system is pretty sound and large and regional banks are well-capitalized. She also said that this is not a credit crisis, but rather a situation where a few banks have some problems. Citigroup was one of 11 major banks that threw a lifeline to First Republic last week in an effort to help it buy time for restructuring.