The meaning and consequences of frozen credit markets

Subscription Required By Vincent Valery Introduction   March 26, 2020, © Leeham News: Credit markets are effectively frozen for many businesses, Boeing said this week. That’s why the company asked Congress for $60bn in federal aid for itself and the aerospace industry as part of the $2 trillion emergency stimulus package. Although the bill, which at this writing is awaiting Congressional approval, doesn’t name Boeing specifically, The Washington Post indicated $17bn is for Boeing. Related article
  • See this article discussing Boeing CEO David Calhoun’s comments on the company’s liquidity and ability to raise debt in the current environment. Calhoun pointed out that credit markets aren’t open now. Boeing CFO Greg Smith made a similar comment later in the day
  • The current market stress has similarities but fundamentally different origins from 2008. LNA analyses its causes and consequences for airlines and OEMs.
Summary
  • A different economic shock from 2008 freezes credit markets;
  • Significant consequences for nonfinancial corporations;
  • Airlines and OEMs at the forefront of turmoil;
  • Programs to re-open credit markets;
  • Long-term consequences.

To read the rest of the article Login or Subscribe today.