The Fed's latest moves in response to the coronavirus crisis take it "well beyond the lender-of-last-resort functions it played" during the Great Recession.
As painful as this reckoning is likely to be, substantial restructurings must occur across several industries on accelerated timelines.
The Fed's unusual intervention in the market will help but "is unlikely to prevent distress at businesses with less certain long-term viability."
“We are now in QE infinity, again,” a CIO says after the Fed announced unlimited asset purchases in response to the coronavirus crisis.
The 2020 tests will give the Fed "increased information on how leveraged loans and collateralized loan obligations may respond to a recession."
Accommodative monetary stimulus has encouraged financial risk-taking, leading to “worrisome” levels of debt with poor credit quality, the Fund says.
If the Fed is going to conduct monetary policy by manipulating asset prices, it should expect to see periods of extreme market volatility.
Nonfinancial corporate debt is at a record high, and for some companies the leverage is unsustainable, says an IIF paper.
With corporate debt running at 145% of China's GDP, a top Fund official urges Beijing to tackle the "key fault line" in the economy soon.
The rating agency said it downgraded 892 corporate issuers (accounting for about $6.9 trillion in rated debt) in 2015.
