High frequency and alternative data indicators in May indicate the economic shock from the coronavirus pandemic will be concentrated in the second quarter, in line with our expectations. We forecast a slow recovery in the second half of the year for most economies.

Lucie Villa of the Sovereign team discusses a debt relief initiative for low-income countries grappling with liquidity pressures. Also, Daniela Jayesuria of the Structured Finance team offers insights on coronavirus-related debt moratoriums for individual and corporate borrowers in Latin America, one of the biggest securitization markets in emerging markets.​​​​​

The coronavirus outbreak is disrupting economies and credit markets worldwide. The impact on issuers’ credit profiles and the economy will depend on the severity and duration of the crisis.

Liquidity for the weakest speculative-grade US corporates worsened in April as the coronavirus crisis continued to cut more deeply across most industries. Lower-rated companies that rely on the leveraged loan market, where liquidity has evaporated, are getting hit the hardest. But many stronger speculative-grade companies are able to tap the US high-yield market, which has recovered following the US Federal Reserve’s support for corporate bonds.