tyb
>Muh bakers union
JPMorgan tells small business customers to apply with other banks on fear that funds will run out
JPMorgan Chase is warning some customers that even if fresh funds for the federal small business relief program are approved, the money won’t last and they might be better off applying elsewhere.
JPMorgan on late Wednesday emailed thousands of customers who have applied to the Paycheck Protection Program to say that while Congress is headed towards replenishing the effort, the bank is concerned “that funds could run out again quickly,” according to a copy obtained by CNBC.
The bank, which has been inundated with requests for more than $40 billion in loans since April 3, has placed customers in one of four categories indicating the progress of applications. Those furthest back in line are in Stage 1, and they received the starkest language:
“Your application is still in Stage 1, with an extremely large volume of applications ahead yours,” the bank said. “We wanted to give you this information, so that you can decide if you would like to try applying with another lender.”
Small business customers have complained that banks, including JPMorgan, have been slow to process applications for a program that Treasury Secretary Steve Mnuchin said would result in same-day funding of loans. The furor grew after the initial $350 billion earmarked for PPP was quickly depleted and it was revealed that bigger clients, including publicly traded companies with access to capital markets, had greater success in securing loans.
Even before the second round of $310 billion in PPP funding is approved by lawmakers, which is expected to happen Thursday, industry experts have said the funding could last mere days. Banks have been building an ever-growing backlog of completed applications that can be sent through the Small Business Administration’s loan portal when the program reopens.
Still, business owners may face long odds if they apply at other banks, because many lenders have prioritized their own customers and new applicants would be at the end of the line. There is no guarantee that lawmakers will approve more money for the program after the second round.
Last week, JPMorgan said that it had $26 billion worth of loans from hundreds of thousands of customers that needed to be funded.
https://www.cnbc.com/2020/04/23/jpmorgan-tells-small-business-customers-to-apply-with-other-banks-on-fear-that-funds-will-run-out.html
agree.
it's amazing to me how many people still use the big banks-even after the '08 bailouts. It's a simple switch to a CU and it's not under the FDIC. NCUA
AMMO84 Beech Huron from Edwards AFB east west tracks.
This AC has had some interdasting traces over the last several days all in this general area.
April 20th was called COBRA02-cap#2
Cap#3 no call on April 16th.
SoCal Logistics airport located just se of here and as previously mentioned the area this AC is flying over is where there are several ground markings and covered tunnels.
Over 10% of CLOs Fail Collateral Tests, Putting Payouts at Risk
More than 10% of U.S. collateralized loan obligations are now at risk of cutting off cash payments to holders of their riskiest portions amid a surge in downgrades among leveraged loans backing the securities, according to analysts at Nomura Holdings Inc. and Wells Fargo & Co.
About 13% of portfolios failed their so-called junior over-collateralization tests in April, based on a Nomura analysis of roughly 750 CLO deals where payment data was available. Wells Fargo said in a note Thursday that 11% of those it analyzed didn’t pass, and more than half are exceeding standard caps that limit CCC rated loans they can hold to 7.5% of the portfolio, while about 14% breached Caa limits.
CLOs have a battery of monthly compliance tests used to determine payouts to investors of varying levels of priority. But as downgrades to leveraged loans continue to pile up amid the coronavirus pandemic, many managers are now overburdened with more low-rated debt than typically allowed. That’s forcing them to either dump poor performing loans at fire-sale prices, or potentially cut interest payments to investors.
“Rating agencies are being much more aggressive in downgrading loans to CCC versus during the financial crisis, and that could result in higher levels of OC breaches,” said Steven Oh, global head of credit and fixed income at PineBridge Investments. “Some of the OC failures are likely to extend even higher up the capital structure.”
While most of the OC test failures were for the riskiest equity portion and lower-rated debt tranches, there have already been a handful of breaches at the AA level, and at least one at the AAA level.
CCC Dilemma
CLOs entered this year with a record proportion of loans rated B- or B3 – one notch above the lowest junk tier.
Now, as downgrades mount, portfolios are filling up with CCC rated loans. That can force managers to begin marking their worst-performing loans at their trading price, rather than par. That in turn reduces the average value of the portfolio and can trip asset-coverage tests, which causes cash-flow streams to certain investors to get turned off – a mechanism designed to protect those who purchase less risky portions of the portfolio.
The average CLO saw a 94 basis point drop in its minimum OC cushion, from an average starting position of 392 basis points, according to Wells Fargo.
As more loans are downgraded, so too will the CLO tranches themselves.
Moody’s put 859 CLO bonds, worth $22 billion, on review for downgrade last Friday, including 355 in the BBB equivalent tier and 369 in the BB equivalent bucket. S&P also on Friday placed 155 CLO tranches on negative watch.
https://www.bnnbloomberg.ca/over-10-of-clos-fail-collateral-tests-putting-payouts-at-risk-1.1426144
the reality is that this is a much higher number…muh "self-regulation and all that'''