Signature-free sizzle and facebook fizzles

According to a report issued by Moody’s earlier this week, the retail sector managed to notch a record number of defaults during Q1 2013, with nine retailers defaulting on their debt. The falloff comes during another otherwise healthy economic period, and has largely been chalked up to the rise of eCommerce (and the resulting fall of the mall). Moody’s specifically cited the “fallout of changing consumer behavior and advancing eCommerce for traditional brick-and-mortar retail.”

The default count was small in January, with only one reported, but both February and March “overperformed” with each reporting four defaults. They weren’t quite the biggest months – they are in a three-way tie for first with December of 1998, which also saw four retail sectors default.

“A year ago, we noted that 14 percent of retail debt issuers were distressed and predicted that both the U.S. and European retail sectors would have the highest one-year default rates among all corporate sectors,” analysts at Moody’s noted. “By the end of 2017, there had been 13 retailer defaults for the year, second only to the oil and gas industry.”

Sears, for example, has been locked in a very active battle to avoid bankruptcy for the last several years, moving to refinance nearly $500 million in debt last month (as well as selling some of their stores online). However, that did not move the credit rating agencies, which ruled the deal a “distressed exchange” (essentially a default).

And, particularly for U.S.-based firms, taking on new debt is getting expensive. As the Federal Reserve has spiked rates over the last 24 months, short-term borrowing costs have markedly increased. That could create financial headaches for companies that need new loans, as well as those that have taken on floating-rate debt, where interest expenses rise with rates – not at all auspicious when there is already a sizeable amount of debt in the market: According to other reports, as of Q3 2017, corporate debt relative to GDP was at an all-time high.

And according to Moody’s, some big retailers have some big debts coming due soon. The credit rating agency is expecting retailers’ maturities to spike to $5.9 billion total in 2019, meaning that firms including Sears, Neiman Marcus and Guitar Center will have some very significant sums to pay back.

Financial firms in China: A trade war may or may not really be in the offing – but China appears to have stepped back a bit, and its president has repeated promises to open up markets. Among them, according to the central bank: Financial markets this year. Extra revenue sources for big banks? Ownership caps are being rolled back, so maximum stakes now will be 51 percent, and ceilings disappear in three years. Open markets, yes, and perhaps we will see some open purses (of the acquisitive kind) moving forward.

Bye-bye, sig: No signatures on debit/credit card transactions via Mastercard as of today, April 13, removing a pro forma that no one was really doing or looking at anyway. A full-fledged nod, finally, to gathering speed at the POS – and how much millennials hate cursive.

India commerce: Gets a nod and a bid from Walmart, maybe. Or … could be Amazon. Rumors swirl around the financial trade press, where the two commerce giants are said to be inching toward taking a majority stake in Flipkart – Walmart, it is said, by the end of June. The opportunity beckons in a $200 billion market.

Facebook, of course: Mr. Zuck went to Washington, and it wasn’t pretty. But you probably read all about it in your newsfeed – or ours. In case you missed it, the data leak tally has swelled to a blistering 87 million users, and the backlash is … lashing. And all the while, the calls for regulatory action grow louder. From Facebook … to FacetheMusic?

Theranos: The blood testing company faces more bloodletting, as layoffs continue – and really, there’s nothing left to bleed out. The company let go of almost all of its remaining staff in an effort to keep bankruptcy at bay for a few months.