Drawdowns on C&I credit more than quadrupled in a seven-day period ended March 25. Lenders may try to rein them in if the crisis drags out, but legal precedent isn’t on their side.
With seven in 10 rooms sitting empty amid the coronavirus outbreak, hotel and banking groups are urging policymakers to open up the Term Asset-Backed Securities Loan Facility.
Losses on commercial real estate aren’t expected to be as bad as the 2008 crisis; as more cities announce shutdowns, consumers turn to online payments.
Banks are avoiding the once booming hospitality business, or charging a premium for additional credit, as new data shows how big a hit hoteliers have taken from the pandemic.
Dozens of firms in industries most immediately hit by the virus and oil-price war — such as leisure, transportation, health care, energy and mining — have been drawing billions of dollars from existing credit lines.
Bankers say they understand the need for an extraordinary government response to the coronavirus outbreak, but worry that even slashing interest rates won’t stimulate demand.
The move come a day after the Bank of England cut rates and introduced a series of emergency measures, including capital requirements and a lending program for smaller companies.
Banks with the most exposure to oil and gas companies say they’ve added capital and changed their borrower mixes since the 2015 market fall. But skeptics question whether they can stave off losses if low prices endure.
