May 7, 2020 - Energy & Environment
Dallas Fed boss warns of oil-sector bankruptcies amid coronavirus crisis
Federal Reserve Bank of Dallas President Robert Kaplan told Yahoo Finance Wednesday that he expects a substantial number of bankruptcies in the U.S. oil sector despite the recently expanded access to Fed's Main Street Lending Facility.
How it works: "[T]hat program will be designed for companies that would be already be creditworthy," said Kaplan, whose district has a large number of energy companies.
- "If you're a company on the other hand, that is more highly leveraged than that, concerned about insolvency and other credit issues ... it's not going to be able to access those programs."
- "And there will be a substantial number of bankruptcies, restructurings that are going to have to happen, because so much of production is being shut in."
What we're watching: Other policy levers the Trump administration may try and use to prop up battered domestic producers.
Go deeper: Whiting Petroleum files for bankruptcy as coronavirus takes a bite out of the economy