S&P Global Market Intelligence reports that corporate bankruptcies totaled 470 between January and September 2020, the highest number of filings for any comparable period in the past 9 years. Of these, 36 were so-called mega-bankruptcies as these companies had more than $1 billion in liabilities at the time of filing. Consumer discretionary, industrials and energy sectors led bankruptcy filings.

Extraordinary times call for extraordinary measures. And the Fed continues to respond appropriately. On April 9, the Federal Reserve once again drew on its full range of authorities to expand and establish lending facilities to provide up to $2.3 trillion in loans to stabilize households, communities and businesses of all sizes during the pandemic crisis and to “ensure that the eventual recovery is as vigorous as possible”.

Aircraft ABS are currently insulated from coronavirus-related disruption in global travel. Still, a prolonged slowdown in global air traffic would negatively impact aircraft ABS structures.

SFA's recent CLO white paper explores balancing crucial lending with financial safety and soundness.