Written Assignment 1:

 Highest level of debt to earnings in Transportation industry:

Transportation businesses contain of asset and non-asset based enterprises.
Asset-based trades comprise cargo haulers, delivery firms and limousine
enterprises; non-asset based companies consist of cargo agents and third-party
logistics suppliers. Mutually have individualities that isolated them from peers in
other businesses. In accumulation, asset-based transportation corporations
suffer significant capital expenses because of the vehicles and associated
equipment they are buying or leasing. Numerous firms-specific financing
choices be existent for business’s necessities.
Transportation industry debt leads to new highs from year 2014 to current
situation, even as per incomes increases but at a slower speed and more low
during current pandemic. The ongoing increase in debt in previous years has
appealed consideration due to the ratio of debt to business earnings frequently
peaks throughout economic declines and not for the period of economic
developments. Though Europe is further down wavering stages of lockdown
countrywide, the transportation industry remains to play an energetic part in
economy. Supply chain logistics are the mainstay of this entire public.
Debt to Equity Ratio yearly based:2015 to 2020
2020 2019 2018 2017 2016 2015
2.91 1.44 1.64 1.18 1.11 1.51

Lack of funding due to not enough

for upholding and successful
performance of transport systems,
Divergence of determination,
Abstruseness in the product, Time
structure misalignment between
the time range of the organization
project and the time range of the
invest in are some of the reasons
of highest debt to equity ratio
which is continuously increasing
with in current situation.

Because of debt repayment 54.56%

industry slightly enhanced to 0.01.

Poorly performing industries:

Industries which have occupied on debt more rapidly includes Utilities, energy
companies and materials companies, they’ve putted additional to earnings.
In excess of the last period, over-all annual EBITDA for the S&P 500 entirely rise and
then compressed, though debt issuance has sustained to proceeds off in last time
period. It shows that the net debt as compared to EBITDA ratio, or what time period is
needed to consider to pay off that company’s debt, which has been driven up.

Considerably of that inconsistency among debt and earnings has been initiated by
utilities for example Dominion Resources and Duke Energy, they have mutually loaded
on $7 in debt for each dollar in yearly incomes added, mainly above the last two years.
Materials corporations such as Ball Corp. and Freeport-McMoRan has added additional
extra net debt as compared to new incomes, and energy companies for
example Halliburton, Chevron and Marathon as a collectively further has increase debt
and mislaid EBITDA.

 Part 2:

Debt-Financing options includes bank loans and bond issues on short and long
term bases. Few bankers and officials have already took part to reshape the
financial system so that it turns to be a buffer which engrosses economic shocks
instead of a loudspeaker which converts things poorer. It faces a severe test
because of covid-19 pandemic and the economic fallings-out it has prompted.
The shock has four features: an unsettled long-term increase in borrowing; an
impending cash crisis at companies as workplaces and industrial units are closed
and quarantines enforced; the gumming-up of some credit markets; and
uncertainties about the flexibility of banks and debt reserves that may tolerate
any damages.

 Sponging by non-financial companies in worldwide debt souks rushed following

the Covid-19 shock, issuance of bond boomed, though syndicated loan
originations drop back.
 Easier access to bond markets, big companies considerably enlarged their
borrowing. Other industries met restricted access due to their dependence on a
stressed syndicated borrowing market and obstacles in switching to bond
markets.
 Huge companies, which had lower cash buffers pre-crisis as compared to smaller
firms, pre-owned part of the fresh credit to increase their shock absorber in
adding to meet liquidity shortfalls.

Companies around the emerging countries have external debt around $11 trillion
and $3.9 trillion approx. in debt service pending in current situation worldwide.
And around $3.5 trillion is for foremost refunds. About $1 trillion is debt service
pending on long-term and intermediate debt, on the other hand rest is for short-
term debt.

During current situation, it is announced by the International Monetary Fund (IMF) that short-term
debt loans and finance advantages will accessible for developing market nation-states. Debt relief
initiative by the IMF and other global governments will provide help in terms of feeding, but it also
support to save lives. From that viewpoint, it is possible that the return on investment is reasonably
in growth for the debt relief programs. Still in current situation government and officials has earned
good return by some of industries like medical and bio industry but still economy is at its downfall in
these two years due to pandemic.

 Part 3:

Current situation of economy during tough pandemic time has caused in an

extraordinary COVID-19 debt mountain for nationwide companies which the officials
has tried to hold with chaos like the Coronavirus Business Interruption Loan Scheme
(CBILS) with low interest rate and long time to payback. Refinancing is being used
nowadays to replace existing debt facilities with new facilities because it is providing
more suitable arrangements for business. During economy downfall industries in
developed countries goes near to bankrupt. The significant causes why companies
select to refinance are:

 improved business development

 to take advantage of better and less interest rates with long duration
 for shifting to a fixed or variable interest rate item for consumption
 more flexible structures in a debt produce to bump into commercial
requirements
 due to new debt facility to upsurge overall borrowing
 adjustment in current financial cash flow obligation demands to fund debt to
minimize and streamline repayments

Refinancing might include using a new lender, Exit fees, Costs related with setting
up new facilities, Under-estimating the power of your relationship with current lender,
altering what debt products make up your ability or increasing the funding limit on
current aptitude. Due to coronavirus outbreak refinancing issuance through high
yield bond markets in the U.S and Western Europe, Southern Europe, including Asia
Pacific exclusive of Japan, has proficient record levels of action in spite of COVID-
19.

According to figures high yield bond refinancing in U.S scaled by 24% from US$77.8
billion in second quarter of 2020 to US$96.8 billion in third quarter of 2020.
Refinancing year on year for the nine months ending Quarter third is up from
US$115.7 billion in year 2019 to US$226.8 billion year 2020.In European (Western,
Southern ) markets have also gotten high yield refinancing echo from Q2 2020 to Q3
2020, by issuance up and around US$10.1 billion to US$26.1 billion. From 2019
levels year-on-year it is raised, with issuance for the first nine months of 2019 next in
at US$45.3 billion contrasted with US$54.8 billion to the end of Q3 2020.The
issuance records shows that there is no other choice for the companies instead of
refinancing old debt with new debt due to current situation there is also another
reason that as capital markets have revived, mortgagors have required opportunities
to refinance and prolong debt maturities in a low interest rate atmosphere.
Federal Reserve has apprehended interest rates near 0% in the United States and
gestured its aim to retain rates at such levels for as extended as compulsory to
upkeep post-COVID-19 economic regaining. The European Central Bank’s (ECB)
leading rate is too at 0%, though rates in China remained trimmed to score lows
earlier in the year. Less rates have stimulated borrowers to yield to market and
refinance current facilities at lower cost.

And while experts expect may be interest rate increase slightly in 2021, but it is
still relatively low associated to pandemic’s before situation. It means that it
may be still a worthy time for companies to refinance and protect their
business from downfall. Relief Refinance of Existing Lender Debt Program is a
profitable loan assurance program for banks and credit unions which are Maine
investors. These loans are entitled for pro-rata insurance reporting of up to 50%.Due
to such relief programs it is good to save business and going bankrupt by
refinancing over old debt with new debt but collectively current situation is tough for
global economy to stand and grow.

REFERENCES:
 Sources of Debt Financing. (n.d.). Small Business - Chron.com.
https://smallbusiness.chron.com/sources-debt-financing-67077.html
 Csimarket.com. (2018). Transport & Logistics Industry financial strength,
leverage, interest, debt coverage and quick ratios. [online] Available at:
https://csimarket.com/Industry/industry_Financial_Strength_Ratios.php?
ind=1101.
 ‌Transport & Logistics Industry financial strength, leverage, interest, debt
coverage and quick ratios. (2018). Csimarket.com.
https://csimarket.com/Industry/industry_Financial_Strength_Ratios.php?ind=1101
 Debt Financing - Overview, Options, Pros and Cons. (n.d.). Corporate Finance
Institute. https://corporatefinanceinstitute.com/resources/knowledge/finance/debt-
financing/
 ‌Smith, L. (2020, October 1). Why Companies Issue Bonds. Investopedia.
https://www.investopedia.com/articles/investing/062813/why-companies-issue-
bonds.asp
 Economies on the brink: The Covid-19 effect. (2020, March 29).
Lowyinstitute.org; The Interpreter. https://www.lowyinstitute.org/the-
interpreter/debate/economies-brink-covid-19-effect
 Białek-Jaworska, A., & Krawczyk, T. (2020). Corporate bonds or bank loans?
The choice of funding sources and information disclosure of Polish listed
companies. Central European Economic Journal, 6(53), 262–285.
https://doi.org/10.2478/ceej-2019-0017
 Kambayashi, S. (2020, March 12). Corporate bonds and loans are at the centre
of a new financial scare. The Economist. https://www.economist.com/finance-
and-economics/2020/03/12/corporate-bonds-and-loans-are-at-the-centre-of-a-
new-financial-scare
 Kose, M. A., P. Nagle, F. Ohnsorge, and N. Sugawara. 2020. Global Waves of Debt: Causes and
Consequences. Washington, DC: World Bank.

 Refinancing business debt. (2021, February 8). Newable.

https://newable.co.uk/refinancing-business-debt/
 Refinancing remains resilient | White & Case Debt Explorer. (n.d.). Debt
Explorer. Retrieved April 3, 2021, from
https://debtexplorer.whitecase.com/leveraged-finance-
commentary/refinancing-remains-resilient#
 Now Is A Great Time to Refinance Your Mortgage, With One Big
Caveat. (2020, June 16). NextAdvisor with TIME.
https://time.com/nextadvisor/mortgages/refinance/great-time-to-
refinance/