BAC - Bank of America Corporation
21.33 -0.06 (-0.28%)
After hours: 6:17PM EDT
| Previous close | 20.03 |
| Open | 21.03 |
| Bid | 21.33 x 1300 |
| Ask | 21.36 x 41800 |
| Day's range | 20.81 - 21.60 |
| 52-week range | 17.95 - 35.72 |
| Volume | 95,873,771 |
| Avg. volume | 79,823,750 |
| Market cap | 186.623B |
| Beta (5Y monthly) | 1.70 |
| PE ratio (TTM) | 7.78 |
| EPS (TTM) | 2.75 |
| Earnings date | 14 Apr 2020 |
| Forward dividend & yield | 0.72 (3.59%) |
| Ex-dividend date | 04 Mar 2020 |
| 1y target est | 29.70 |
- Yahoo Finance
Federal Reserve to backstop Paycheck Protection Program loans
The Federal Reserve will backstop the Small Business Administration’s emergency loan program, as lenders continue to work through the Paycheck Protection Program.
- Yahoo Finance
JPMorgan’s Dimon: 'There should have been a pandemic playbook'
'I am hoping that civility, humanity, empathy and the goal of improving America will break through. We have the resources to emerge from this crisis as a stronger country,' writes Jamie Dimon in his annual letter.
- Bloomberg
Mexico’s Low-Key Stimulus Plan Criticized by Business Groups
(Bloomberg) -- Mexican President Andres Manuel Lopez Obrador said the country’s economic answer to the coronavirus outbreak will be limited to public works projects, low-interest loans to the poor and budget tightening, triggering criticism from businesses leaders asking for bigger stimulus measures.In a speech late Sunday that was short on new announcements and broad measures, Lopez Obrador said he’d tap into Mexico’s rainy day oil fund, known as FEIP, along with disbursing more than 2 million loans for housing and small businesses. He also vowed to create 2 million jobs in nine months, a major undertaking considering Mexico created only about 342,000 net jobs in all of 2019, Lopez Obrador’s first full year in office.Having spent much of his life criticizing the close relationship between the political and the business elite in Mexico and vowing to protect the poor, the president now refuses to propose measures that he furiously objected to in previous administrations. He is betting that by showing a different approach to deal with an economic crisis he will consolidate his credentials as a leader who’s breaking with Mexico’s recent political past.“This is a new model. We can’t go on with the same,” AMLO, as the president is commonly known, said Monday morning during his daily press conference, which lasted over two hours. “We said we won’t be applying the same political economy that failed time and time again.”He repeated there won’t be bailouts or tax exemptions to companies and banks, saying the only rescue plan will be for “the people of Mexico.”Collision CourseAMLO’s reluctance to aggressively tackle a recession that some economists say will be worse than the devastating Tequila Crisis of the mid-1990s is putting him on a collision course with Mexico’s business representatives.On Monday, the Consejo Coordinador Empresarial, the country’s top business lobby group, called the president’s announcement “incomplete” for the big crisis Mexico is facing and said measures shouldn’t be delayed.Canacintra, another business group that represents industrial firms, criticized the government for not implementing counter-cyclical policies, saying the economic crisis may cost Mexico as many as 1.4 million jobs.Read More: Mexico President Pushes Business Tensions to Boiling Point (1)Disappointment over Mexico’s answer to the crisis helped send the peso to a record low in Asian trading on Monday, with the currency touching a record low 25.7849 per dollar. It advanced later on, but under-performing Latin American peers.Some analysts are concerned that the stimulus package won’t be nearly enough to help pull the economy out of a contraction estimated at 5% of gross domestic product this year.“His message, as we expected, did not have anything new,” said Carlos Petersen, an analyst with Eurasia Group in Washington. “It’s more of the same: his social and infrastructure plans, with some additional resources or through credits.”Read More: Mexico GDP Expected to Shrink 8% This Year, Bank of America SaysIn his Sunday speech, Lopez Obrador reiterated he will continue with the construction of the new Santa Lucia airport in Mexico City and the Dos Bocas refinery, two of his pet projects that will draw billions of dollars from public coffers and which he argues will increase jobs.His government is also cutting Pemex’s tax burden by an extra 65 billion pesos ($2.5 billion), although it wasn’t immediately clear if this is a new measure. And he vowed not to let Mexico fall further into debt.The fiscal plan is “underwhelming,” Alberto Ramos, chief Latin America economist for Goldman Sachs, wrote in a note following the president’s speech. Mexican authorities “seem to be underestimating the economic impact of the viral pandemic and the need for a deeper re-orientation of fiscal policy.”“This Sunday’s message shows a president that faces a drastic change of circumstances but insists that his course of action is the right one,” Citigroup economists led by Sergio Luna wrote in a research piece.Lopez Obrador added that the government will announce this week an investment package of 339 billion pesos in energy infrastructure with private companies. He said he’ll cut salaries from top government officials including his own, and require further operational expenditure cuts.“It is extremely concerning that the president is not willing to adjust and change plans in a moment that the economy will really need it,” Petersen said. “It’s clear that Lopez Obrador is convinced that his plans will work, which will make any change in his strategy very difficult. And the later he reacts the worse it will be for the economy.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Bank of America CEO Says Half a Million Customers Have Deferred Payments
(Bloomberg) -- Half a million of Bank of America Corp.’s 66 million customers have deferred loan payments because of financial fallout from the coronavirus.“The idea is to defer the payment, defer the impact,” Chief Executive Officer Brian Moynihan said in an interview Friday on CNBC. “We’re working with our customers who need help, who are losing their jobs. We have to preserve their ability to have cash flow.”The lender is also dealing with a deluge of requests for funds from the government’s small-business relief program. By Friday evening, it had received 85,000 applications requesting $22 billion.The Charlotte, North Carolina-based lender earlier said it was prioritizing 1 million of its existing small-business borrowers because they had already been vetted and could receive funds most quickly, Moynihan said.That approach sparked criticism, including from Senator Marco Rubio, a Republican from Florida, who tweeted that the policy isn’t from the government but rather from Bank of America. “They should drop it,” he said.The bank later said it would broaden its lending soon.“In this first initial launch, we have focused on our full-relationship clients” comprised of current borrowers, Dean Athanasia, president of the bank’s consumer and small-business division, said in a memo to staff. “We are also highly focused on responding to the needs of our core small-business customers who do not currently have any borrowing relationship. We will expand our process soon and, in the meantime, are addressing these through an escalation process.”President Donald Trump, meanwhile, tweeted Friday that a “great job” is being done by Bank of America and many community banks. “Small businesses appreciate your work!”Some banks, including Wells Fargo & Co., said they weren’t ready as lenders across the country grappled with a lack of detailed guidelines from the government. JPMorgan Chase & Co. started taking applications Friday afternoon after warning clients Thursday night it was still awaiting guidance and may not be ready the following day.Separately, Moynihan said in the CNBC interview that only 5% of Bank of America’s trading employees are working from the company’s offices.(Updates with loan application volume in third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Yahoo Finance
Top House Republican touts rollout of $349 billion for small business, but ‘there will be some glitches’
Amid reports of problems with early rollout of the ‘Paycheck Protection Program,’ one of the key negotiators of the deal acknowledged “there will be some glitches.”
- Yahoo Finance
Banks were not prepared for flood of small business coronavirus loan applications
Banks were supposed to start processing loan applications on Thursday at midnight from small businesses under the $349 billion Paycheck Protection Program, but they weren't prepared for the onslaught.
- Bloomberg
U.S. Payrolls Fall 701,000 in March Ahead of Surge in Layoffs
(Bloomberg) -- U.S. employment plummeted last month by a degree not seen since the last recession, in just an early glimpse of the devastation from the coronavirus pandemic.Payrolls fell 701,000 from the prior month -- compared with the median forecast of economists for a 100,000 decline -- according to Labor Department data Friday that mainly covered the early part of March, before government-mandated shutdowns forced firms to lay off millions more workers. This was the first decline in monthly payrolls since 2010.The jobless rate jumped to 4.4% -- the highest since 2017 -- from a half-century low of 3.5%, and is expected to surge in the coming months. Bloomberg Economics sees the rate rising to 15% soon, while Federal Reserve Bank of St. Louis President James Bullard said it may hit 30% this quarter.Click here for a transcript of Bloomberg’s TOPLive blog on the jobs report.The numbers are already outdated. Because the reference period for the jobs report is based on the 12th of the month, it didn’t capture the vast majority of the nearly 10 million people who have filed for unemployment benefits in the last two weeks alone.Such projections are a dramatic shift from just a month ago, when job gains topped 200,000 and employers were having so much difficulty finding qualified workers that they were hiring previously marginalized populations such as people with criminal records. President Donald Trump has frequently touted strong employment figures as he runs for re-election this year.But in the last few weeks, the disease known as Covid-19 has rapidly spread across the U.S., killing thousands and leading an increasing number of states to encourage or order their citizens to stay home.“The abruptness with which the economy has taken this step down is so striking,” FS Investments Inc. Chief U.S. Economist Lara Rhame said on Bloomberg Television. “It’s like a hurricane but hitting the entire country at the exact same time.”What Bloomberg’s Economists Say“Workers who were paid for just a few hours during the early part of the month were still counted as a nonfarm payroll, so the March data are only an early snapshot illustrating the start of unprecedented job losses -- in terms of both speed and magnitude -- in the economy. April job losses will be at least 30 times larger, in the vicinity of 20 million. Unemployment will soar toward 15% next month.”\-- Carl Riccadonna, Yelena Shulyatyeva and Andrew HusbyClick here for the full note.Treasury yields and U.S. stocks were lower Friday following the report. The Bloomberg dollar index held gains.Congress and the Trump administration are trying to help individuals and small businesses rocked by the economic shutdown, with a loan program for small firms getting off the the ground Friday and direct checks en route to many households in coming weeks.But the program that provides up to $350 billion in aid to small businesses, aimed at preventing further layoffs, has been mired with website glitches and a lack of communication with lenders. Additionally, some of the $1,200 checks meant to soften the economic toll on Americans may not arrive until September.Employment in leisure and hospitality was hit particularly hard, falling by 459,000 in March, nearly wiping out two years of job gains. The losses were mainly in food services and drinking places. Private payrolls overall dropped by 713,000.Average hourly earnings rose 0.4% from the prior month and were up 3.1% from a year earlier, both above estimates -- and potentially due to the removal of low-wage workers from the ranks of the employed.The Bureau of Labor Statistics said the unemployment rate would have been almost 1 percentage point higher if workers who were recorded as employed but absent from work due to “other reasons,” were classified as unemployed on temporary layoff. The BLS said that this discrepancy might result from respondents misunderstanding a survey question.“The jobs report was extremely weak, sending an ominous signal of what is to come,” said Michelle Meyer, head of U.S. economics at Bank of America Corp. “Not only were the numbers terrible but the BLS noted that they could have been worse.”In addition, the figures may be less reliable than usual because survey response rates were significantly below typical levels from both households and businesses.The Labor Department said in a special note that “It is important to keep in mind that the March survey reference periods for both surveys predated many coronavirus-related business and school closures in the second half of the month.”A separate report Friday from the Institute for Supply Management showed measures of business activity and employment at U.S. services firms contracted in March, an abrupt reversal from solid growth the previous month.Other DetailsThe average work week fell to 34.2 hours, the lowest since 2011, in a sign companies began pulling back before laying off workers. Temporary workers fell by 49,500, the largest decline since 2009; retail jobs fell by 46,200.The initial wave of layoffs hit Hispanic and Asian Americans harder, with their unemployment rates each jumping 1.6 percentage points to 6% and 4.1%, respectively. The white jobless rate rose 0.9 point to 4%, and it was up 0.9 point to 6.7% for black Americans.Government jobs rose by 12,000, with a 17,000 rise in temporary jobs tied to the decennial census count.The number of people classified as unemployed on temporary layoff totaled 1.85 million, up from 801,000 in February, for the biggest one-month increase in records going back to the 1960s.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Market’s Jobs Response Signals Yield-Curve Control Is Here
(Bloomberg Opinion) -- If the past two days of trading in U.S. Treasuries are any guide, yield-curve control might have already reached the world’s biggest bond market.On Thursday, Labor Department data showed a record 6.65 million people filed jobless claims in the week ended March 28, blowing past estimates for 3.76 million. When added to the previous week’s tally, it showed almost 10 million Americans were out of work because of the coronavirus pandemic. And yet, 10-year Treasuries took those figures in stride. The borrowing benchmark fluctuated by less than 7 basis points, the tightest range since Feb. 19, the same day the S&P 500 Index hit a record high. It closed 1 basis point higher than where it started the day, at 0.597%.On Friday, Labor Department data showed U.S. payrolls fell 701,000 in March compared with February, the first decline since 2010 and far exceeding the median forecast for a 100,000 drop. The jobless rate rose to 4.4%, the highest since 2017, and strategists are already expecting the April report to show nothing short of a crash, with 20 million jobs lost and an unemployment rate of 15%. Again, 10-year Treasuries barely budged at about 0.59%.From an economic state-of-play perspective, Friday’s jobs report was always going to be stale. It only captured payrolls from the week that included March 12 — when many people were still reporting to work as usual. Bond traders are paid to look ahead, and no employment figures right now will help in that effort. They have the same question as the rest of America: “Is the worst over yet?”Until they get an answer, the best way forward seems to be counting on the Federal Reserve to take whatever actions are necessary to keep the $17 trillion Treasuries market in order. Effectively, bond traders seem to be entering a period of unofficial “yield-curve control” as long as the world’s largest economy deliberately grinds to a standstill.The increase in the Fed’s balance sheet since the job report’s reference date has been nothing short of extraordinary. The central bank gobbled up $1.5 trillion of assets in the past three weeks, far and away the steepest climb on record. It has started to scale back only slightly, while also introducing a temporary repurchase agreement facility that lets other central banks swap Treasuries for dollars. That should stem forced sales by so-called foreign official holders.It seems reasonable to expect the Fed to continue outright purchases for the foreseeable future, given that the Treasury will ramp up issuance to cover the $2 trillion coronavirus relief package. Taking cues from the central bank is at least a more reliable strategy than trying to read between the lines of horrid jobs data. Wage growth, once the most important figure in the monthly release, is now meaningless. Average hourly earnings actually beat expectations in March by rising 3.1%, likely because a large group of lower-paid workers lost their jobs.I have called yield-curve control, an idea championed last year by Fed Governor Lael Brainard, a bond trader’s nightmare. That’s probably still true, though the wild price swings of March were arguably even more frightening. To be clear, the central bank has not officially set any sort of target. But it has provided clear forward guidance: the Fed will buy “in the amounts needed to support the smooth functioning of markets for Treasury securities and agency MBS.”With so much still unknown about how long it will take the U.S. to slow the pace of the coronavirus outbreak and what the ultimate economic damage will look like, it makes sense that traders would find comfort in a range. While Bank of America Corp. technical strategists said this week that 10-year yields could hit zero in the next three months, somewhere around the current 0.6% feels about right, given what’s known about the labor market and nationwide shutdowns so far, as well as what’s contained in the relief package.Treasuries have little data to trade on except glimmers of hope that the global economy will get to the other side of this crisis sooner rather than later. That’s not a backdrop for decisive trades. It’s not quite yield-curve control, but it’s close.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
BofA Prepares for Deluge of Small-Business Loan Applications
(Bloomberg) -- Bank of America Corp. is preparing for a flood of applications from U.S. small businesses seeking government relief to weather the coronavirus outbreak.“We know for these businesses speed is of the essence,” the bank said in a statement. “We can move fastest with our nearly 1 million small-business borrowing clients. That is our near-term priority. As the administration has made clear, going to your current lending bank is the fastest route.”The Charlotte, North Carolina-based company had staff working overnight Thursday to prepare for expected high volumes of applications Friday. The initiative is part of the $2.2 trillion government stimulus package and is aimed at helping small businesses survive the devastating impact of the pandemic.“We’re setting up shop and activating thousands of people to be able to take the applications,” Chief Executive Officer Brian Moynihan said in an interview Wednesday on Bloomberg Television. The bank has been heavily involved in talks with the White House and Treasury on the program, he said.On Thursday, the Small Business Administration bumped up to 1% the interest rate lenders may charge small businesses after banks complained that the previous approved rate of 0.5% was below even their own cost of funds.U.S. Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza released additional guidelines for the program just a few hours before it’s expected to become widely available Friday.“This is a very important program,” Mnuchin said in a news conference Thursday. “Please bring your workers back to work if you’ve let them go.”(Updates with Mnuchin’s comment in last paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Investing.com
Bank of America Stock Falls 3%
Investing.com - Bank of America (NYSE:BAC) Stock fell by 3.16% to trade at $19.91 by 11:43 (15:43 GMT) on Friday on the NYSE exchange.
- Bloomberg
Banks Tighten Lending to Nervous Homeowners Hoping to Tap Equity
(Bloomberg) -- Market condition: severe. That’s Bank of America Corp.’s new assessment of a corner of the U.S. mortgage industry facing a deluge of applications from homeowners looking to shore up their finances.The coronavirus pandemic, which is prompting nervous Americans to tap into record amounts of home equity as a buffer against an economy tipping into recession, has also led Bank of America to aggressively tighten its standards for home equity lines of credit, or Helocs. Wells Fargo & Co. has taken similar actions, and JPMorgan & Co. may change its policies too.Homeowners looking for ways to build up a cash cushion while capitalizing on interest-rate cuts by the Federal Reserve can do so through Helocs -- open-ended credit lines that use properties as collateral -- or through cash-out refinancings. But banks are getting choosier about underwriting Helocs, with the aim of ensuring that customers will actually use the loans rather than hoarding the money for a rainy day.Applications for home equity loans and lines of credit jumped as much as 33% from a year earlier in recent weeks, before stay-at-home orders cut application volumes, according to data from Informa Financial Intelligence. At Nations Lending Corp., which originated some $2 billion of mortgages last year, applications for cash-out refinancings have doubled, a spokesman said.The surge in applications comes as economists warn that the U.S. economy will contract as a result of government-imposed shutdowns to stem the spread of the deadly coronavirus, putting millions of people out of work and erasing trillions of dollars of wealth.‘Fear Is Building’“If you’re a homeowner, you’ve always been told that one of the easiest ways to access cash in a pinch is to tap the equity in your home,” Nations Lending Chief Executive Officer Jeremy Sopko said in an email. “In a normal environment, this is absolutely true. But this is no normal environment. And so fear is building.”But at big banks, the worsening economy is leading them to restrict who they’ll lend money to, one illustration of how banks are working to bolster their balance sheets ahead of the coming downturn.Bank of America significantly tightened its standards for loans to homeowners wanting to borrow against their equity, ratcheting up an internal gauge that measures market conditions from the company’s lowest level to its highest, “severe,” according to records reviewed by Bloomberg. The minimal credit score it’ll accept from borrowers is now 720, up from 660.JPMorgan, meanwhile, may boost its minimum credit score for new Helocs to 720 as well, up from 680, and is also considering other changes, such as limiting approvals to customers who already have a mortgage or checking account with the bank, said a person with knowledge of the matter. The bank’s goal is to slash application volume by as much as 75%.Stingier ValuationsWells Fargo cut the maximum amount homeowners can borrow and reduced how much the bank will lend relative to a property’s value, according to a person with knowledge of the changes. The bank is applying stingier valuations to homes due to a lack of inspections and appraisals resulting from the pandemic.Representatives for Bank of America and JPMorgan declined to comment. A Wells Fargo spokesperson said the bank is “focused on continuing to support our customers and meet their needs, while appropriately managing risks in the current environment.”The banks’ move to limit loan approvals for homeowners stands in contrast to their lending to businesses, which increased almost 13% last quarter, according to figures from the Bank Policy Institute, a trade association representing large financial firms.Piggy BanksHelocs function like credit cards, with lenders setting a maximum amount homeowners can borrow at any one time. Their use exploded in the years leading up to the housing crash more than a decade ago, as surging property values prompted homeowners to use their dwellings as piggy banks. Heloc borrowing dropped off after the housing bubble burst and scarred homeowners sought to reduce their debt.The property recovery since then has inflated homeowners’ net worth, leading to a record $6.2 trillion of housing equity that U.S. homeowners could borrow against as of December, the highest ever year-end total, according to analytics firm Black Knight Inc.The average homeowner has about $119,000 in equity to use as collateral, Black Knight figures show. For residences with a mortgage, homeowners collectively owe the equivalent of 52% of their homes’ value, making their properties prime targets for taking out loans against.“The uncertainty around the depth and length of the economic contraction caused by the coronavirus is prompting people to act,” Tendayi Kapfidze, chief economist at online marketplace LendingTree Inc., said in an email. “Having a line of credit available can be a buffer against loss of income or employment, an insurance of sorts.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Oil Tanks at Africa Hub Off Limits to Many as Market Floods
(Bloomberg) -- Oil tanks at one of the world’s largest storage hubs on Africa’s southern tip are filling up fast, said people familiar with the matter, depriving many traders of vital capacity just as the market is hit by a historic flood of crude.The 45 million-barrel Saldanha Bay oil storage terminal, the largest in the southern hemisphere, has been a vital outlet for surplus crude in past slumps, such as the great recession of 2008 to 2009. This time around, as the combination of the coronavirus pandemic and Saudi Arabia’s price war with Russia creates a record-breaking oversupply, its role may be more limited.The facility is close to full, said four people with knowledge of the site’s operations. Several other people said all of the capacity there had been leased to trading houses, but space remained in some of their tanks and they expected additional crude deliveries.A spokesman for South Africa’s Central Energy Fund, which manages the country’s energy assets, declined to comment. Saudi Arabia is only a couple of days into a record supply surge above 12 million barrels a day, but the oil market has already been contending with a vast surplus for weeks. International lockdowns aimed at slowing the spread of the coronavirus are emptying roads, shutting businesses and factories, and keeping billions of people at home.Oil has slumped 60% this year as about a quarter of global demand was wiped out. The market structure is deep into contango -- when future prices are higher than near-term contracts -- making it profitable to store the commodity for any trader with access to tanks.Multiple analysts have predicted that, based on current supply, demand and inventory levels, the world is just weeks from running out of places to store the glut.Saldanha’s six tanks -- completed in the 1980s during the apartheid era to ensure oil supplies for the then politically isolated country -- are generally leased out to trading companies. A joint venture of Hamburg-based Oiltanking GmbH and local company MOGS Oil & Gas Services, has been building over 13 million barrels of additional storage with smaller tanks that allow more flexible blending options.(Updates with differing views on status of tanks in third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
T-Mobile’s Jumbo Bond Draws Good Reception
(Bloomberg Opinion) -- A headline from three days ago read “Banks Stuck With $23 Billion of Loans for T-Mobile’s Sprint Deal.” A group of 16 banks would have to provide money to T-Mobile US Inc. to close its planned acquisition of Sprint Corp. because they couldn’t sell debt to third-party investors. T-Mobile would refinance the bridge loan in the bond market as soon as financing conditions improved.Well, that was quick.The mobile carrier plans to tap the corporate-bond market Thursday with a deal of about $10 billion, with proceeds helping repay that $19 billion bridge credit agreement (it signed a new $4 billion term loan on Wednesday as well). Even though it’s one of the biggest debt sales of the year, financial markets still remain highly volatile and T-Mobile’s credit rating was cut this week deeper into speculative grade, the company received more than $30 billion of orders from investors, Bloomberg News’s Molly Smith reported.That’s impressive, considering that the initial pricing levels for this investment-grade offering were already favorable for the company. T-Mobile’s 10-year bonds are expected to yield around 375 basis points more than benchmark Treasuries, Bloomberg News reported, citing a person familiar with the matter. By comparison, a Bloomberg Barclays index of triple-B corporate bonds with an average maturity of 11.75 years has a spread of 359 basis points, near the lowest since March 18. That’s close enough — and it’s likely that T-Mobile’s gap will narrow with such a large order book.It’s even more interesting to compare this new deal, with the lowest investment grades of Baa3 by Moody’s Investors Service and BBB- by S&P Global Ratings, and T-Mobile’s last offering in January 2018, which is speculative grade. The company priced 10-year bonds at the time at a spread of 209 basis points more than Treasuries, to yield 4.75%. T-Mobile’s spreads are now much wider, even though this new debt is “senior-secured,” but 10-year U.S. yields are more than 200 basis points lower than they were 26 months ago. That means the all-in 10-year yield for T-Mobile will probably be about 4.35% — a good deal lower than the previous rate.This is important context to remember for both companies and bond buyers. The rapid price swings across markets in the past month and the focus on yield spreads have somewhat masked the fact that whenever the outlook starts to stabilize, borrowing costs will once again be as low as ever for creditworthy corporations. The benchmark 10-year yield is a mere 0.6%, near the all-time low closing level of 0.54% set on March 9. Bank of America Corp. technical strategists said in a report Thursday that the benchmark could reach 0% this quarter and potentially even turn negative if governments struggle to contain the coronavirus outbreak.With so much uncertainty, it’s understandable that T-Mobile seized on this window to get on with its plans. It formally completed its merger with Sprint on Wednesday morning. Mike Sievert, who was named chief executive officer, told Bloomberg TV on Wednesday that the timing of the bond sale relative to the bridge loan was “coincidental.” The fact that the group of banks was ready to help get the acquisition over the finish line was the most prudent first step, he said. Then the company deemed the market had thawed enough to borrow.“We’ve been watching the markets over the past few days and seeing an improving condition for us to go to the market with this investment-grade offer. Today looked like the right day,” Sievert said. “The last couple of days, obviously we were in the process of taking down the bridge and we had the merger news that made the last couple of days the wrong time to be in the market.”Obviously, T-Mobile would have had a better borrowing backdrop a few months ago. But large companies are rarely in position to perfectly time the market. In most cases, good reception is enough. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Investing.com
Bank of America Stock Rises 3%
Investing.com - Bank of America (NYSE:BAC) Stock rose by 3.28% to trade at $20.45 by 10:30 (14:30 GMT) on Thursday on the NYSE exchange.
- Bloomberg
Bank of America Lets 50,000 Mortgage Borrowers Skip Payments
(Bloomberg) -- Bank of America said it has agreed to allow 50,000 mortgage customers to defer payments for three months because they’ve lost income as a result of the pandemic.The borrowers have all kinds of home loans, including some that are not federally backed, said Bill Halldin, a spokesman for Bank of America.To qualify for the government forbearance program, passed last week by Congress as part of the stimulus package, homeowners must contact their lenders and request help. It’s only for people who have a hardship because of the coronavirus, though it doesn’t require them to present proof.The new legislation allows borrowers with federally backed mortgages to stop making payments for as many as 180 days, with the possibility of extending that period. But it’s not supposed to be a payment holiday. They’ll have to make it up, interest and all.Servicers have reported a surge in calls though some lenders like Bank of America are allowing borrowers to apply for forbearance online.(Updates with details of new forbearance rules in the fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
‘Dead Cow’ Oil Play Set to Be Next Permian is Now, Well, Dead
(Bloomberg) -- Just a bit more than 3 weeks ago, the head of Argentina’s state-run driller outlined an aggressive $1.8 billion spending plan for 2020 in the country’s Vaca Muerta shale region, based on $60-a-barrel crude. With global prices starting the year above $68, it wasn’t unrealistic.Now, all bets are off.The toxic mash-up of an oil-price war between Saudi Arabia and Russia, two of the world’s largest producers, and the Covid-19 pandemic have driven global crude to below $25 a barrel. That’s created a new reality for Argentina’s plans to develop a formation known as the Vaca Muerta, or “dead cow” in English. The region is often compared with the Permian Basin in the U.S., with the promise to push out a million barrels of oil a day and turn around an economy on course for a third straight contraction this year.“They were in a place where they were drawing significant interest in the region because it was one of the better resources globally, but that’s falling apart,” according to Fernando Valle, an analyst with Bloomberg Intelligence.At today’s low prices, even state-run YPF SA’s three flagship shale projects -- where costs are lowest, with break-evens in U.S. dollars in the mid-to-high thirties -- would lose money. Meanwhile, the company’s New York-traded shares are down by almost 60% since oil began its plunge in February, and Bank of America Securities is predicting they can fall a lot more. YPF declined to comment.For years, exploration companies have been excited about Vaca Muerta in Patagonia, with the quality of its so-called mother rock rivaling shale areas in the U.S. The companies, including global oil majors Chevron Corp. and Royal Dutch Shell Plc, have begun drilling in the region, though mostly as an initial step designed to get a better handle on how to bring the oil to market even as significant logistical and economic hurdles remain.But the bottom line has suddenly changed. Any plans for test drilling, early-phase production and infrastructure investments are going to be postponed, said Ignacio Rooney, an upstream oil analyst in Buenos Aires for consultancy Wood Mackenzie. The only chance for progress, he said, would come if Brent can stabilize above $30 a barrel, meaning investments in Vaca Muerta’s most developed fields would continue to make sense.The price crash “puts all Argentine oil production in doubt,” YPF Chairman Guillermo Nielsen told the Telam news agency during a recent event in Salta province.There’s another factor for consideration, as well. Coronavirus and the price rout have arrived at a time when drillers were already pulling back in the Vaca Muerta after the government put in place price controls to tame high inflation. The number of rigs operating in Argentina slumped to less than 50 in February, compared with more than 70 before the controls went into effect seven months ago, according to Baker Hughes. At the same time, oil majors worldwide are racing to cut their own spending in response to the dual global challenges.Still, those who’d started committing to Vaca Muerta -- Shell, Exxon Mobil Corp. and ConocoPhillips -- were putting up with price meddling because of Argentina’s long-term shale potential and because new President Alberto Fernandez was promising to safeguard their investments with special legislation.Meanwhile, in a bid to save drilling, oil-producing provinces and powerful trade unions have been lobbying the federal government for a domestic crude price of about $50 a barrel, likely funded by fuel consumers at the pump. Such a move would mirror a similar strategy by previous President Cristina Fernandez de Kirchner.Speaking to reporters in Buenos Aires, even Juan Jose Aranguren, a former energy minister and free-market champion who weaned Argentina off subsidized crude in 2017, said artificial pricing could be the way to go to protect Vaca Muerta.But a problem -- albeit, perhaps, a temporary one -- has emerged with that idea. A nationwide lockdown in Argentina to stop the spread of coronavirus has dramatically suppressed demand for fuel. That means drillers wouldn’t benefit from high local crude prices anyway because they’ll need global buyers for the production glut.With the likes of Shell and Exxon analyzing the new price scenario, how things play out in the near future in Vaca Muerta will surely impact chances in the long term of oil flowing freely from the region. In turn, there are big implications for Argentina’s economy.“Vaca Muerta is the primary calling card for investment in Argentina,” Bloomberg Intelligence’s Valle wrote in a March 20 report. “And its development is critical to the country’s recovery.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Investing.com
Bank of America Stock Falls 7%
Investing.com - Bank of America (NYSE:BAC) Stock fell by 7.07% to trade at $19.71 by 15:05 (19:05 GMT) on Wednesday on the NYSE exchange.
- Bloomberg
Indonesia Slashes Growth Forecast by More Than Half on Virus
(Bloomberg) -- Indonesia slashed its growth forecast by more than half as the coronavirus pandemic takes a toll on Southeast Asia’s biggest economy, prompting the government to adopt a series of emergency measures.The economy is now projected to grow 2.3% this year, compared to an initial estimate of 5.3%, Finance Minister Sri Mulyani Indrawati said in Jakarta Wednesday. Under a worst-case scenario, the economy could contract 0.4%, she said.Indonesia is scrapping fiscal limits as it ramps up its response to the virus outbreak. President Joko Widodo on Tuesday took a number of emergency measures, including cutting corporate taxes, temporarily removing the budget-deficit cap and allocating 405 trillion rupiah ($24.8 billion) to fight the pandemic.The new growth forecast is part of sweeping revisions to previous budget estimates announced by the finance minister Wednesday:Fiscal deficit to widen to at least 5.07% of GDP in 2020 from original target of 1.76%Debt-to-GDP ratio to remain at about 60%Revenue to decline by 10%Annual inflation projected in range of 3.9%-5.1% compared to a previous estimate of 3.1%The rupiah, already down almost 13% in the past month, may tumble to as low as 17,500 per U.S. dollar. Under the worst-case scenario, the currency may plunge to 20,000Indonesia Scraps Deficit Ceiling as It Ramps Up Virus ResponseIndrawati said the spread of the novel coronavirus had created a humanitarian and financial crisis that has lead to high volatility and global panic. “We must improve our response,” she said, adding that authorities think the outbreak in Indonesia may peak as early as this month.Like many other countries, Indonesia is confronting a crisis on two fronts, with a spike in Covid-19 virus cases stretching the health system to near-breaking point and the economy rapidly deteriorating.The budget deficit cap of 3% of GDP, introduced in 2003 in the wake of the Asian financial crisis, will be removed immediately, allowing the government to significantly ramp up its stimulus. The government will revert to the 3% cap in 2023.“Getting the outbreak under control should be the first priority, as successful containment is key for any economic recovery,” said Mohamed Faiz Nagutha, an economist with Bank of America Securities in Singapore. “More support is likely still needed given the downside risks to growth, but the government now at least has the option of doing more.” Job LossesThere are worries of widespread job losses in a nation where about 70 million of its 270 million population work in informal employment. Tuesday’s steps follow two previous stimulus packages announced since late February.A decree signed by the president Tuesday also paved the way for the central bank to participate in the auction of sovereign bonds to help the government meet its larger budget financing needs. Bank Indonesia may directly buy the notes to ensure there’s no abnormal spike in yields and only if the market fails to absorb additional supply, Governor Perry Warjiyo said Wednesday. The central bank may be asked to buy the securities as a last option, Indrawati said.The yield on 10-year rupiah sovereign bonds rose 3 basis points on Wednesday to 7.93%, after rallying 96 basis points in March, the biggest monthly gain since 2013. (Updates with comment from economist in eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Zacks
BofA's Solid Liquidity to Help Tide Over Coronavirus Crisis
Strong balance sheet position and fundamental strength will likely support BofA (BAC) amid coronavirus crisis.
- Business Wire
Bank of America U.S. Minimum Hourly Wage Reaches $20
One year ago, Bank of America announced it would raise its U.S. minimum hourly wage to $20 over a two-year period. The first increment to $17 was made in May 2019; six months later, the company announced it would accelerate the move to $20 by a year; and in March this year, Bank of America made this change.
