2020-03-23 Bloomberg Businessweek

◼ FINANCE Bloomberg Businessweek March 23, 2020

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not expecting every company that’s increased its

debt load to run into trouble, but those with weaker

balance sheets will suffer. “Leverage always adds

insulttoinjury,”hesays.

Inrecentdayssomeofthelargest,mostcredit-

worthy companies, including PepsiCo Inc. and

Exxon Mobil Corp., have been able to sell new

bonds. But the door remains closed for riskier

businesses that might rely on the junk bond or

leveraged-loan markets for financing, says Elaine

Stokes, a portfolio manager at Loomis Sayles & Co.

A prolonged debt market shutdown is a particu-

larly dire threat to the financial system, because

the consequences can spread well beyond corpo-

rate treasurers’ offices. As borrowing costs for the

biggest companies rise, so too can loan interest for

smaller businesses and consumers. And failure to

get new financing can push a struggling company

into bankruptcy, forcing it to cut jobs.

With bigger social costs at stake, many corpo-

rate credit investors are expecting more stimulus

Welcome to the fastest-ever bear market. It broke

out smack at a market top, something that almost

never happens. As shocking as the 2008 financial

crisis and crash of 1987 obviously were, both fol-

lowed months of downward drift—though that was

only visible in retrospect.

In just four weeks, U.S. stocks have already

completed the 30% plunge that matches the

median loss of the last 10 bear markets. The

median time it took the earlier episodes to lumber

to the bottom? One and a half years. Now that

● Stock Traders Have No Map

NELSON ALMEIDA/AFP/GETTY IMAGES

▼ Heading home after a

dark day on the Street

that could help companies in trouble and grease

the debt machine. “We have to get the markets to

function normally so that all these companies that

we need to be up and running and paying their

employees can borrow,” Stokes says. �Claire Boston