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A recent post by New York Federal Reserve researchers in the Liberty Street Economics blog examined if areas that are more financially distressed were affected by COVID-19 to a greater extent than other areas. The researchers used county-level data, on numbers of cases and deaths, compiled by the New York Times and the New York City Department of Health (Department of Health) for our analysis. For measures of financial health, they used the New York Fed’s Consumer Credit Panel (CCP), a nationally representative sample of Equifax credit report data. Our data set for this analysis includes roughly 1 percent of the nation’s adults with credit records in anonymized form. "We have seen that there is a strong relationship between COVID-19 cases and pre-COVID delinquency rates at the county level and this correlation cannot be easily explained by some known sources of heterogeneity in COVID-19, such as income, minority status, and population density," according the the New York Fed researchers. "This suggests that the harms from COVID-19 — the loss of life and health, the decline in employment, the destruction of businesses and the surge in medical expenses — will fall on counties particularly ill-suited to bearing them."

Though Trump signed an executive order last week directing agencies to study the need for a new moratorium, it did not directly stop evictions across the country, the Washington Post reported. In New Orleans, city courts have received more than 500 eviction complaints since late mid-June when a state eviction ban was lifted. There are no signs of it slowing down after Trump’s action, local officials say. In Milwaukee, where thousands of people are still waiting for unemployment benefits, legal aid attorneys discussed presenting Trump’s executive order to judges in the hope of stopping the recent spike in local evictions but determined it would not work. Trump’s order was appreciated, but there was “nothing definitive that the court could act on,” said Colleen Foley, executive director of Legal Aid Society of Milwaukee. “I hope there is something coming down the pike, [but] right now we can’t act on it.” Trump’s executive order directed some regulators to study whether an eviction moratorium was necessary and others to investigate whether they could appropriate money for rental assistance. But it fell short of reinstating the federal eviction ban that prohibited evictions of 12 million renters in government-backed properties that expired last month, as many had expected.

U.S. home builder confidence rose for a third straight month in August to match its highest level ever as record-low interest rates spur buyer traffic, data released showed showed in the latest indication the housing market is a rare bright spot in the economic crisis triggered by the coronavirus pandemic. At the same time, however, a growing number of home owners are falling behind on their mortgages with tens of millions still out of work and growing signs that the labor market recovery is softening, Reuters reported. The National Association of Home Builders/Wells Fargo Housing Market Index rose 6 points to 78, matching a series record set in 1998. But even as home builder confidence surges, more homeowners affected by the crisis have stopped paying their mortgages, a separate report showed. The delinquency rate for residential mortgages rose to 8.2 percent in the second quarter, up nearly 4 percentage points from the first quarter and the largest quarterly increase on record, according to the Mortgage Bankers Association. Loans backed by the Federal Housing Administration, a program used by many first-time buyers and those with lower incomes, saw their delinquency rate jump to almost 16 percent — the highest since the survey began more than four decades ago.

Libbey Inc., one of the world’s biggest manufacturers of glass tableware, asked the judge overseeing its bankruptcy to allow the company to reject some collective bargaining agreements and cut worker wages by 10 percent, according to a court filing yesterday, Bloomberg News reported. The company’s latest offer to two of its unions, the United Steelworkers and the International Association of Machinists & Aerospace Workers, also includes freezing its defined benefit pension plan for hourly workers. The proposed changes provide cost reductions that are essential to a successful reorganization, the company said yesterday. Libbey expects to emerge from bankruptcy with less than $200 million of funded debt, compared to more than $400 million when it filed for chapter 11 in June, according to the release. The COVID-19 pandemic intensified a burdensome debt load and strained its access to cash.

Regus Corp., which rents furnished office space to businesses and individuals on short-term deals, has put a small portion of its portfolio in New York, Chicago, San Francisco and other cities into chapter 11 bankruptcy as urban office markets face heavy pressure during the coronavirus pandemic, WSJ Pro Bankruptcy reported. Demand for temporary office space in large cities has fallen since businesses around the country adopted work-from-home policies. Regus said in court papers filed yesterday in the U.S. Bankruptcy Court in Wilmington, Del., that the chapter 11 filing buys the company time to continue negotiations with some of its landlords. Regus offers on-demand office and co-working space in more than 1,000 locations across the U.S. and Canada, court papers said. The chapter 11 covers about 2 percent of the company’s U.S. portfolio at some locations in large cities. James Feltman, a managing director at management firm Duff & Phelps LLC who has been retained by Regus, said in a declaration that the business has cut pricing to attract and retain new occupants while taking steps to reduce costs and preserve liquidity. Some occupants, meanwhile, have either fallen behind on occupancy fees or refused to continue paying them to preserve their own cash, Feltman said. Regus, owned by global workspace provider IWG PLC, has negotiated forbearances and rent deferrals with certain landlords and in some instances negotiated permanent modifications to leases to “bring them in line with the COVID-19-adjusted market realities,” Feltman said. Negotiations hit an impasse with landlords at locations covered by the chapter 11 filing, he said.

Payless ShoeSource Inc. twice filed for bankruptcy protection and last year closed its 2,500 North American stores. Now, amid the coronavirus pandemic, the discount shoe retailer is attempting its third comeback, the Wall Street Journal reported. The company, which emerged from chapter 11 bankruptcy protection in January and is now called Payless Worldwide, is relaunching its website today and plans to open as many as 400 stores in North America over the next five years, with the first location slated for Miami this fall. It is following other troubled brands that have found new life online or with smaller physical footprints, such as Toys “R” Us, RadioShack, Dressbarn and Barneys New York. Even retailers that have avoided bankruptcy are closing stores and shifting more online, such as Gap Inc. and Macy’s Inc. Digital startups that had started opening bricks-and-mortar stores are backtracking, including clothing rental service Rent the Runway, which is closing its four retail stores and converting a fifth to a drop-off location. Payless CEO Jared Margolis said the company’s prior trouble is allowing it to restart without the bloated overhead, antiquated technology and thousands of bricks-and-mortar stores that had become a liability as more shopping shifted online, a trend that has accelerated during the health crisis.

Quebec’s pension fund said it spent $75 million in February to double its stake in Cirque du Soleil Entertainment, an investment it was forced to write off in June when the company filed for bankruptcy protection, Bloomberg News reported. Caisse de Depot et Placement du Quebec’s decision to buy an additional 10 percent of the live performance company from founder Guy Laliberte came after months of discussions with shareholders, Caisse Chief Executive Officer Charles Emond said Monday. The fund spent $71 million for its initial 10 percent stake in 2015, he told a panel of lawmakers in Quebec City. Neither amount had been previously disclosed. “With the additional 10 percent we suddenly had more rights about being consulted, having a weight, a greater influence” on debt levels and future shareholders, Emond said. Montreal-based Caisse said this month it wrote off its entire $170 million investment in Cirque, which includes some debt, after the coronavirus forced it to shut down all its shows around the globe. The company is recapitalizing under court protection, with a deadline for bids set for tomorrow. A committee of creditors has the leading bid so far.

Sweden’s Debt Office said today that it has refused a state credit guarantee for Norwegian Air, renewing liquidity concerns for the struggling airline amid the coronavirus crisis, Reuters reported. Norwegian Air was already facing financial difficulties before the pandemic hit and Sweden has stipulated its credit guarantees, under a programme mitigating the impact of COVID-19, can only be granted to airlines assessed to have been financially viable on the last day of 2019. “The Debt Office’s assessment in regard to Norwegian is that as of 31 December 2019 there was a very high risk that Norwegian would not be able to fulfil its financial commitments and that the company was not deemed capable then of managing further indebtedness,” it said in a statement. “Therefore, the company has not been considered financially viable as of 31 December 2019. Accordingly, Norwegian’s application has been denied.” While there will be no immediate impact on the airline, it has indicated it would need more cash to rebuild after the coronavirus crisis hit its operations hard. The group received emergency financial guarantees from the Norwegian government in May, but only after raising cash from owners and forcing creditors to convert part of the debt to equity.