Rokhaya Cisse and Marina Cremonese of the Asset Management team explore why the pandemic fallout has dimmed revenue prospects and made growth harder for asset managers. Plus, Celina Vansetti-Hutchins looks at how a difficult operating environment and elevated asset risk are driving our negative outlook for financial institutions in emerging markets.
Though banks are in better shape now than during the 2008 financial crisis, with few credit ratings being cut, problem loans will rise and profitability will not return to pre-pandemic levels soon.
Christina Padgett and Sandra Veseli of the Corporates team, Al Remeza of the Structured Finance team, and Ana Arsov of the Financial Institutions team discuss the outlook for leveraged finance and collateralized loan obligations (CLOs) in the US and EMEA. Coronavirus-related defaults will likely peak in 2021, but banks’ exposure is limited. Lower-rated loans to coronavirus-exposed sectors will be worst affected, with a knock-on effect on the junior tranches of existing CLOs.