- via Bloomberg
- The struggles of traditional retailers and those who rent them space have been well covered, but this is happening (a net 3.8K store closings so far this year) in a fairly strong economy. What happens at the next downturn?
- Taking it a step further, what of the sizable piles of debt on the balance sheets of the retailers and mall/shopping center owners, and who stands to lose as that paper turns bad?
- Only $100M of junk-rated retail borrowing are maturing this year, but that will jump to $1.9B in 2018, and from 2019-2025 will average about $5B annually.
- Low interest rates have helped, but the Fed is in a tightening cycle, and the Nordstrom (NYSE:JWN) going-private effort failed thanks to the 13% interest rate lenders required.
- Regional and local lenders are most exposed to retail debt (33% market share), with CMBS garnering 24%, national banks 15%, and insurers 13%.
- ETFs: XLF, FAS, FAZ, XLY, KRE, VFH, XRT, UYG, KBE, VCR, IYF, FNCL, BTO, RTH, IAT, RETL, FDIS, IYG, KBWB, QABA, FXD, FXO, SEF, KBWR, RYF, FINU, DPST, RCD, FINZ, PMR
- Now read: MBA Mortgage Applications
Original article