May 5, 2020 - Economy & Business

J. Crew bankruptcy is likely the first of many driven by coronavirus shutdowns

Dion Rabouin, author of Markets
Reproduced from Moody's Investors Service; Table: Axios Visuals

Retailer J. Crew's Chapter 11 bankruptcy filing Monday "is likely the first of many companies to restructure in- or out-of-court in the next one to two years," S&P Global Ratings analysts warn in a new report.

Driving the news: J. Crew is the eighth debt-issuing retail and restaurant company to default on its debt this year, equaling the total from all of 2019 in just over four months, S&P notes.

  • "We expect the economic shutdown and lingering social distancing behaviors to trigger a broad shakeout of retail," S&P Global Ratings analyst Sarah E. Wyeth writes in the report.
  • "The industry needs to meaningfully reduce its physical footprint and rapidly evolve to reach the post-pandemic consumer."

What's happening: Ratings agencies S&P, Fitch and Moody's have been slashing retail companies' credit ratings as their debt levels rise and income streams dry up because of the coronavirus pandemic.

  • About 30% of the approximately 125 issuers S&P rates in the retail and restaurant sectors now hold credit ratings that imply at least a 1-in-2 chance of default.

It gets deeper: A record high 412 companies are now rated B3-negative or lower by Moody's, a rating equivalent to B- by S&P and Fitch, and well-below investment grade.

  • That number is up from 311 last month and more than double the number of companies rated this low in 2019.
  • It's also 42% above the high of 291 touched during the financial crisis, Moody's says.

Go deeper: Envision Healthcare considering bankruptcy

Go deeper

Biden formally secures Democratic presidential nomination

Joe Biden speaks at Delaware State University's student cente on June 5. Photo: Jim Watson/AFP via Getty Images

Former Vice President Joe Biden became the formal Democratic presidential nominee on Friday evening, per AP.

The big picture: Biden has been the presumptive frontrunner to take on President Trump since Sen. Bernie Sanders suspended his campaign in early April.

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 9 p.m. ET: 6,724.516 — Total deaths: 394,018 — Total recoveries — 2,996,832Map.
  2. U.S.: Total confirmed cases as of 9 p.m. ET: 1,894,753 — Total deaths: 109,042 — Total recoveries: 491,706 — Total tested: 19,231,444Map.
  3. Public health: WHCA president says White House violated social-distancing guidelines to make reporters "a prop" — Jailing practices contribute to spread.
  4. Sports: How coronavirus could reshuffle the sports calendar.
  5. Jobs: Better-than-expected jobs report boosts stock market.
  6. Media: The Athletic lays off 8% of staff, implements company-wide pay cut.

Scoop: German foreign minister to travel to Israel with warning on annexation

Heiko Maas. Photo: Michael Kappeler/picture alliance via Getty Images

German Foreign Minister Heiko Maas is expected to travel to Israel next week to warn that there will be consequences if Israeli leaders move forward with plans to annex parts of the West Bank, Israeli officials and European diplomats tell me.

Why it matters: Israeli and European officials agree that if Israel goes ahead with unilateral annexation, the EU will respond with sanctions.