Speed bump on Main Street, oil slips, and more

The Federal Reserve’s $600 billion Main Street lending facility had covered less than $77 million in loans to only eight companies near the end of July, further revealing how little reach the program has had, even as millions of businesses vie for survival.

The Fed on Thursday released a report breaking down each outstanding loan, including the lending bank, borrower and loan amount as of July 27. Of the eight companies, six are in Florida and received loans issued by the City National Bank of Florida.

House Coronavirus Crisis Subcommittee Chair Jim Clyburn on Thursday pressed the Federal Reserve and Treasury Department on why they didn’t include job retention requirements in an emergency lending program for midsized businesses or make it more accessible to smaller firms.

Companies that take advantage of the Fed’s “Main Street” program have to make “commercially reasonable efforts” to retain employees, but unlike the “paycheck protection” goal of the small business rescue, they don’t have to formally pledge to use the money for payroll.

Oil dipped below $45 a barrel on Friday on worries that a demand recovery would slow due to a resurgence of coronavirus cases, although a pledge from OPEC member Iraq to cut output further in August gave some support.

The resurgence of infections remains a key issue for the market and demand outlook. Tallies show cases in the United States are rising in a number of states.

The world's largest offshore rig operator Transocean has hired Lazard to advise it on strategic alternatives for its capital structure, Bloomberg has reported, citing a company statement.

Transocean reported a net loss of $497 million for the second quarter of the year, compared to a negative result of $392 million for the first quarter. Still, the offshore rig operator also reported an increase in contract drilling revenues for the second quarter, at $930 million, up from $759 million for the first quarter of the year.

BP is preparing to sell a large chunk of its oil and gas assets even if crude prices bounce back from the COVID-19 crash because it wants to invest more in renewable energy, three sources familiar with BP’s thinking said.

The strategy was discussed at a BP executives meeting in July, the sources said, soon after the oil major lowered its long-term oil price forecast to $55 a barrel, meaning that $17.5 billion worth of its assets are no longer economically viable.

S&P Ratings just warned about a possible future downgrade to Boeing’s credit. But the market is a few steps ahead of the ratings firm—the aircraft manufacturer’s bonds have been trading as if they were already rated at junk.

Analysts at S&P revised the outlook for Boeing’s (ticker: BA) rating—now at BBB-, the lowest tier in investment grade—to “Negative” from “Stable” on Wednesday afternoon. They take the view that the recovery in demand for air travel, and aircraft, will take longer than they thought. If the recovery continues to lag behind their forecasts, the analysts could lower the rating further.

During the shambolic negotiations between Congress and the White House, one of US president Donald Trump’s proposals was to suspend the payroll tax funding social security for several months, ie long enough to buy some popularity before the elections. That was rejected by the Democrats for not covering the unemployed and for reducing the dedicated funding for the national pension system.

At the same time, there is a cross-party consensus that the Federal Reserve should not raise policy interest rates, and to continue open-ended funding of what will be an even larger federal deficit.

Last month, major U.S. cities from coast to coast and north to south joined cities across the globe in issuing an action plan to directly address a "green and just recovery." The plan was produced by the C40 Global Mayors COVID-19 Recovery Task force, whose aim is rebuilding cities and economies in a way that "improves public health, reduces inequality and addresses the climate crisis" — a strong ESG agenda.