AMERICAN AIRLINES was among the worst travel industry performers in the high-yield market Friday.
Daniel SlimAFP via Getty ImagesBonds sold this week from
well-known issuers such as
McDonald’s Corp. and
Cigna Corp. have been bat-
tered in the secondary mar-
ket. Leveraged loans contin-
ued a two-week plunge, with
more loans dropping below
90 cents on the dollar after
trading closer to 99 or par
before the sell-off.
“It feels very tenuous,”
said Jerry Cudzil, head of
U.S. credit trading at TCW
Group. The market is illiq-
uid, and buyers are naming
their price, he said.
Comments Friday morn-
ing in New York from White
House economic advisor
Larry Kudlow seemed to re-
move the worst sense of
panic in the market. Kudlow
favors “timely and targeted
micro-measures” to respond
to the economic effects of
the coronavirus, he said dur-
ing an appearance on
Bloomberg Television.
Despite the slight re-
prieve, the pain was wide-
spread, with travel compa-
nies and energy bearing the
brunt.
American Airlines and
Viking Cruises Ltd. were
among the worst travel in-
dustry performers in the
high-yield market Friday,
with some of their bonds
yielding more than 12%, ac-
cording to Trace. Energy
bonds plunged with oil, af-
fecting investment-grade
companies including Hess
Corp. and riskier borrowers
such as Chesapeake Energy
Corp., whose 2025 bonds
were trading at just 40 cents
on the dollar.
Some of the prices can be
misleading, said Mark Ben-
bow, a fund manager at Ed-
inburgh-based Kames, who
trades in both European and
U.S. markets. Since traders
are so averse to taking risk,it’s more reflective of bonds
being marked down as op-
posed to real buying or sell-
ing activity, he said.
“The prices on the screen
are a bit of smoke and mir-
rors,” Benbow said. “In reali-
ty, brokers either don’t have
the inventory, or don’t want
to be too long or too short on
any position, so it’s very diffi-
cult to buy or sell.”
It’s also been difficult to
bring new debt offerings, for
those brave enough to tap
the markets. After a six-day
hiatus, the longest streak
since July 2018, the invest-
ment-grade market re-
opened this week, only for
some borrowers such as
Oneok Inc. to pay massive
new issue concessions and
see their bonds immediately
trade lower after pricing.
In other markets such as
leveraged loans, borrowers
aren’t even trying to bring
new deals, or are rethinking
plans to do so. Pharmaceu-
tical research company Alk-
ermes yanked a planned
$350-million loan from the
market Friday, citing mar-
ket conditions, the fifth deal
to be pulled this week. Just
one deal launched this week,
for $380 million, the lowest
volume of 2020 so far.Leveraged-loan prices
fell to the lowest since Janu-
ary 2019, and the sell-off ac-
celerated Friday morning,
with many issues sinking an
additional one to two points,
traders say.
The average loan traded
at 94.8 cents on the dollar
Thursday, the lowest level
since early last year. Actual
trading volumes, however,
were muted as buyers and
sellers attempted to discern
the appropriate price,
sources said.
“This is the first day the
loan market has felt sloppier
for higher levered credits
and especially for credits
most tied to travel, lodging
and group leisure activities,
even post Larry Kudlow’s
comments,” said Scott
Macklin, director of lever-
aged-loan strategies at Alli-
anceBernstein.
“There still is good two
way flow for higher quality
credits, albeit at lower lev-
els.”
Loan investors are weigh-
ing a double hit. They may
see weaker earnings that
erode companies’ ability to
pay them back.Smith and Boston write for
Bloomberg.Corporate bonds take a hit
[Bonds,from C1]
LATIMES.COM/BUSINESS S C
A dizzying, brutal week
on Wall Street dropped one
last round of harrowing
swings on investors Friday.
After skidding sharply
through the day as fear
pounded markets, U.S.
stocks’ and bond yields’
steep drops suddenly eased
up in the last hour of trading
amid hints from Federal Re-
serve officials that the Fed
may offer more support to
the economy.
By the end of trading, the
Standard & Poor’s 500 index
had more than halved its
loss for the day, ending down
1.7%, and even locked in a
gain for the week. It’s the lat-
est lurch in a wild ride that
has sent stocks flipping be-
tween huge gains and losses.
Investors are trying to
guess how much economic
damage the coronavirus
outbreak will ultimately in-
flict, and they’re shifting by
the minute as central banks
and governments offer stim-
ulus on one end and the
number of new infections
piles up on the other.
Treasury yields took an-
other breathtaking drop to
record lows.
The 10-year Treasury
yield falls when investors are
worried about a weaker
economy and inflation, and
it sank below 0.7% at one
point. Before this week, it ne-
ver in history had been below
1%. It was at 1.9% at the start
of the year, before the virus
fears took hold.
Benchmark U.S. crude
tumbled 10.1% — its biggest
drop in more than five years
— to $41.28 a barrel.
Even a better-than-ex-
pected report on U.S. jobs
wasn’t enough to pull mar-
kets from the undertow. In-vestors looked past Febru-
ary’s solid hiring numbers
because they came from be-
fore the new coronavirus
was spreading quickly in the
country.
At the heart of the drops
is the fear of the unknown.
Because it’s new, experts ar-
en’t sure how far it will
spread and how much dam-
age it will ultimately do.
The S&P 500’s Friday
drop was the latest swing in
a remarkably turbulent
week. The index jumped
4.6% on Monday, fell 2.8% on
Tuesday, climbed 4.2% on
Wednesday and slid 3.4% on
Thursday.
The bond market
sounded the alarm on the ef-
fects of the virus long before
the stock market, and yields
fell further Friday.
The Fed surprised the
market earlier this week by
cutting interest rates by half
a percentage point. In-
vestors expect other central
banks around the world to
follow suit in hopes of sup-
porting markets.
At the same time, doubts
are high about how much ef-
fect lowering rates can have.
Cheaper loans may encour-
age people and businesses to
make big purchases, but
they can’t get quarantined
workers back into factories.
The S&P 500 fell 1.7% on
Friday to 2,972.37 points —
up 0.6% for the week but
down 12.2% from its Feb. 19
all-time high.
The Dow Jones industrial
average fell 1% to 25,864.
points, up 1.8% for the week.
The Nasdaq composite fell
1 .9% to 8,575.62 points, up
0.1% for the week.
The yield on the 10-year
Treasury dropped to 0.77%
from 0.92%. It rallied from as
low as 0.66% earlier in the
day, according to Tradeweb.Interest rates
T-bill: 1 year .37 -0.61 -1.36 -2.1 5
T-note: 5 year .55 -0.36 -0.86 -1.8 9
T-note: 10 years .70 -0.42 -0.85 -1.9 2
T-bond: 30 years 1.22 -0.45 -0.80 -1.7 9Weekly 6 month 1 year
Treasuries Yield change change changeMajor stock indexes
Dow industrials 25,864.78 -256.50 -0.98 -9.
S&P 500 2,972.37 -51.57 -1.71 -8.
Nasdaq composite 8,575.62 -162.98 -1.87 -4.
S&P 400 1,797.79 -32.83 -1.79 -12.
Russell 2000 1,449.22 -29.60 -2.00 -13.
EuroStoxx 50 3,015.20 -122.74 -3.91 -11.
Nikkei (Japan) 20,749.75 -579.37 -2.72 -12.
Hang Seng (Hong Kong) 26,146.67 -621.20 -2.32 -7.Daily Daily % YTD %
Index Close change change change6 Month CD 0.70 0.75 0.75 0.8 4
1 Year CD 0.98 1.06 1.07 1.4 1
2 Year CD 1.02 1.11 1.14 1.3 9
30 Year Fixed 3.66 3.62 3.62 3.7 5
15 Year Fixed 2.98 3.07 3.12 3.0 6
30 Year Jumbo 3.80 3.68 3.73 4.6 6Week 6 months 1 year
Bank & mortgage rates Rate ago ago agoCommodities
Oil: Barrel Apr 20
Gold Ounce Mar 20
Silver Ounce Mar 20Delivery Close Weekly 1 year
Commodity: Unit date in $ change change
41.28 -3.48 -14.7 9
1,670.80 +106.70 +373.8 0
17.21 +0.83 +1.9 4Associated Press (Bank and mortgage rate figures from Bankrate.com)Online updates
For current market coverage plus stock prices and
company data, go to latimes.com/business2400025000260002700028000290003000024000250002600027000280002900030000SOND JF MFriday:25,864.
Down 256.Dow: six months
MARKET ROUNDUPWild week ends
with more losses
associated pressEBay, trying to crack
down on price gougers tak-
ing advantage of co-
ronavirus fears, has banned
sales of face masks and hand
sanitizer on its site.
The online marketplace
told sellers Thursday that
it’s rejecting listings for N
and N100 masks, hand sani-
tizer and disinfecting wipes
and that it is working to re-
move listings with inflated
prices.
It’s also removing listings
whose titles or descriptions
misuse the terms “co-
ronavirus,” “COVID-19” or
“2019nCoV.”
“EBay is taking signifi-
cant measures to block or
quickly remove items on our
marketplace that make false
health claims,” spokeswom-
an Ashley Settle said in a
statement. “We are making
every effort to ensure that
anyone who sells on our plat-
form follows local laws and
EBay policies.”
The move came the day
after California Gov. Gavin
Newsom declared a state of
emergency — a declaration
that helps the state prepare
for the spread of the novel
coronavirus and includes re-
strictions on raising prices of
consumer goods.
“Californians shouldn’t
have to worry about being
cheated while dealing with
the effects of coronavirus,”
state Atty. Gen. Xavier Be-
cerra said in a consumer
alert. “Our state’s price
gouging law protects people
impacted by an emergency
from illegal price gouging on
medical supplies, food, gas,
and other essential sup-
plies.”
Before EBay’s announce-ment, a 20-pack of Gerson
1730 face masks was avail-
able for as much as $148,
while a pack of five 2.5-ounce
Germ-X hand sanitizer bot-
tles cost $500, CNBC re-
ported. (By comparison, two
30-ounce bottles of Germ-X
were offered online by Wal-
mart for less than $8 on Fri-
day.) The EBay listings have
since been removed.
Other companies with
online marketplaces such as
Amazon and Walmart have
also struggled to manage
price gouging from third-
party sellers as the virus
spreads and panic swells.
Newsom called out Ama-
zon in a tweet Tuesday.
“Seriously, @amazon?
These prices are absurd,” he
wrote, attaching a screen-
shot of a small bottle of
Purell hand sanitizer priced
at $79.80 and a 24-pack of
Purell at $400 offered by
third parties on the site.
Amazon said price goug-
ing is a clear violation of its
policies, and noted that it is
illegal in some areas — in-
cluding California. A com-
pany representative said it
had recently blocked or re-
moved tens of thousands of
coronavirus-related listings
with inflated prices.
“We are disappointed
that bad actors are attempt-
ing to artificially raise prices
on basic need products dur-
ing a global health crisis,”
the Amazon representative
said. Newsom gave Amazon
credit for swiftly tackling the
issue in a news conference
this week.
A bipartisan group of
House lawmakers urged
Amazon and EBay execu-
tives to crack down on third-
party vendors selling fake,
stolen or unsafe goods more
broadly, and on Monday,
members of the House Judi-
ciary Committee introduced
a bipartisan bill that in-
creases liability exposure for
companies that risk con-
sumers’ health or safety.EBay bans sanitizer
and face mask sales
Marketplace tries to
counter price gouging
amid COVID-19 fears.
By Suhauna HussainEBAY IS ALSOremoving listings that misuse the
terms “coronavirus,” “COVID-19” or “2019nCoV.”Ben MargotAssociated PressNeueHouse, an operator
of glamorous shared offices
in historic structures, will
open an outpost near Los
Angeles’ Venice boardwalk
in a 1920s building owned by
movie mogul Tony Bill.
With memberships start-
ing at $700 a month, Neue-
House will take over space
on Market Street last occu-
pied by Snap Inc. The owner
of the Snapchat app once
controlled a constellation of
buildings in Venice but has
mostly decamped over the
last two years to a Santa
Monica business park.
One of NeueHouse’s am-
bitions is to undo Snap’s leg-
acy as an insular, aloof
neighbor on the block close
to the center of the bohemi-
an community that, more
than a century ago, devel-
oper Abbot Kinney envi-
sioned as the Venice of
America.
“The street lost a little of
its soul when Snap came in,”
NeueHouse Chief Executive
Josh Wyatt said. “This build-
ing deserves to be brought
back to life.”The two-story brick
building at Market Street
and Pacific Avenue was a
production facility and office
for Bill, an actor turned pro-
ducer and director. He ed-
ited movies there including
“The Sting,” a 1973 crime
comedy he produced that
won the Academy Award for
best picture.
Other creative luminar-
ies including Caleb De-
schanel, John Landis, Hal
Ashby, Oliver Stone and
David Hockney at various
times used the building to
exhibit art or score and
screen films and television
shows.
Bill and NeueHouse re-
cently secured city permits
for a multimillion-dollar ren-
ovation set to begin in April
and be completed by the end
of the year, Wyatt said.
The opaque frosting that
Snap applied to the front
windows on the Market
Street side will be removed
and the building’s original
barn-door-like entrance will
be restored and left open
when the weather is fair, he
said.
Quarterly open houses
and art shows are planned.NEUEHOUSE PLANS to restore the Market Street
building’s original barn-door-like entrance.NeueHouseShared-office
firm NeueHouse
finds Venice digs
By Roger Vincent