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Illustration: Sarah Grillo/Axios

Hotel industry lobbying groups have fired a warning shot, exhorting lawmakers to provide them with financing to avoid a series of debt defaults they say could set off a widespread financial crisis.

Why it matters: Without the bailout — which would be in addition to government funds from the $2 trillion CARES Act — the industry says its members could be the first in a wave of debt defaults that would hit everyone from real estate investors and pension funds to average homeowners.

What's happening: In a letter to the U.S. Treasury, the Fed and the SEC, the American Hotel and Lodging Association (AHLA) and Asian American Hotel Owners Association requested government assistance to avoid defaulting on at least $86 billion in loans over the next several months, the Business Journals' Craig Douglas reports (subscription).

Details: The loans coming due are held in the collateralized mortgage-backed securities (CMBS) market, which is similar to the residential MBS market that crashed, setting off a wave of defaults, foreclosures and bankruptcies in 2008.

  • Rather than the slow churn of buyers falling behind on their mortgages because of unexpected increases to their adjustable rates that happened then, hotels are on the brink of default because of an "unprecedented cash flow crisis."
  • "The impact to our industry is already more severe than anything we’ve seen before, including Sept. 11th and the Great Recession of 2008, combined," AHLA president and CEO Chip Rogers said in a statement earlier this month.

What they're saying: Moody’s Investors Service cut its outlook for corporate debt to negative on Monday, saying "the coronavirus outbreak continues to halt normal business activity worldwide, with no clear turning point yet."

  • Ratings analysts are expecting that "credit quality will deteriorate for rated corporate entities around the world, with defaults rising in the coming quarters."

The big picture: The corporate debt market is in a very precarious position as a result of years of high issuance and desert-thirsty investors hunting for yield.

  • The Fed expects to open a lending facility to buy bonds from issuers who run into trouble, but their programs only apply to investment-grade companies at the top of the credit ratings pyramid.
  • Many of the sectors most at risk of default issue bonds in the so-called high yield or junk bond space, which makes up almost 30% of issued debt.
  • Moody's has said it expects to see significant defaults in the market.

Go deeper: When $2.2 trillion is not enough

Go deeper

1 min ago - Health

CDC extends interval between COVID vaccine doses for exceptional cases

Photo: Joseph Prezioso/AFP via Getty

Patients can space out the two doses of the coronavirus vaccine by up to six weeks if it’s "not feasible" to follow the shorter recommended window, according to updated guidance from the Centers for Disease and Control and Prevention.

Driving the news: With the prospect of vaccine shortages and a low likelihood that supply will expand before April, the latest changes could provide a path to vaccinate more Americans — a top priority for President Biden.

Texas AG sues Biden administration over deportation freeze

Texas Attorney General Ken Paxton speaks to members of the media in 2016. Photo: Alex Wong/Getty Images

Texas Attorney General Ken Paxton is suing the Biden administration in federal district court over its 100-day freeze on deporting unauthorized immigrants, and he's asking for a temporary restraining order.

Between the lines: The freeze went into effect Friday, temporarily halting most immigration enforcement in the U.S. In the lawsuit, Paxton claims the move "violates the U.S. Constitution, federal immigration and administrative law, and a contractual agreement between Texas" and the Department of Homeland Security.

Dan Primack, author of Pro Rata
3 hours ago - Podcasts

Carbon Health's CEO on unsticking the vaccine bottleneck

President Biden has said that getting Americans vaccinated for COVID-19 is his administration’s top priority given an initial rollout plagued by organizational, logistical and technical glitches.

Axios Re:Cap digs into the bottlenecks and how to unclog them with Carbon Health chief executive Eren Bali, whose company recently began helping to manage vaccinations in Los Angeles.