From Richard Branson’s Australian airline to U.S.-based cinema chains and casino operators, the companies most vulnerable to the coronavirus outbreak are facing mounting pressure in global credit markets, Bloomberg News reported. An escalating outbreak that drives off customers and revenue could lead to ratings downgrades, hinder refinancing efforts, and in some cases trigger defaults. And it’s more than just travel companies: Debt-laden commodities producers, shipping firms and luxury automakers have endured waves of selling by debt investors as they ratchet down expectations for global growth. Creditors who’ve spent years pouring money into nearly everything the credit markets had to offer are balking now that the outbreak has spread to more than 65 countries. That’s stoking fears of a prolonged slump in riskier assets. While Central banks from the U.S. to the U.K. and Japan have all said that they stand ready to roll out stimulus to support credit markets, it’s not clear the tactic will work if the problem is an historic slump in consumer demand.
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