Farm Loan Delinquencies Highest in 9 Years as Prices Slump

The nation’s farmers are struggling to pay back loans after years of low crop prices and export markets hit by President Donald Trump’s tariffs, with a key government program showing the highest default rate in at least nine years, the Associated Press reported. Many agricultural loans come due around Jan. 1, in part to give producers enough time to sell crops and livestock and to give them more flexibility in timing interest payments for tax-filing purposes. While the federal government shutdown delayed reporting, January figures show an overall rise in delinquencies for those producers with direct loans from the Agriculture Department’s Farm Service Agency. Nationwide, 19.4 percent of FSA direct loans were delinquent in January, compared to 16.5 percent for the same month a year ago, said David Schemm, executive director of the Farm Service Agency in Kansas. During the past nine years, the agency’s January delinquency rate hit a high of 18.8 percent in 2011 and fell to a low of 16.1 percent when crop prices were significantly better in 2015. While those FSA direct loan delinquencies are high, the agency is a lender of last resort for riskier agricultural borrowers who don’t qualify for commercial loans. Its delinquency rates typically drop in subsequent months as more farmers pay off overdue notes and refinance debt.



As more farmers struggle financially, a recent ABI Journal article took a look at chapter 12 protection and the benefits that it offers. Read more.

PG&E Says It Probably Caused the Fire that Destroyed Paradise, Calif.

Pacific Gas & Electric said today that its equipment probably caused the Camp Fire, the catastrophic November blaze that destroyed thousands of homes in Paradise, Calif., and killed at least 86 people, the New York Times reported. PG&E, which filed for bankruptcy protection in January, said it had recorded a $10.5 billion charge in anticipation of damage claims for that fire, the deadliest in state history. Largely as a result, the company reported a $6.9 billion loss for 2018. Though the cause of the fire is still under official investigation by California officials, PG&E said that it “believes it is probable that its equipment will be determined to be an ignition point of the 2018 Camp Fire.” Attempts to determine the fire’s cause center on the 56-mile Caribou-Palermo electric transmission line. The California Department of Forestry and Fire Protection has said the fire started at 6:33 a.m. on Nov. 8 near a tower on that line. PG&E said that its line de-energized at 6:15 a.m., adding that 15 minutes later an employee observed a fire near the tower. Later that day, utility workers discovered that a part had separated from an arm on the tower, the company said. PG&E said in its report today that the Caribou-Palermo line was not being used because the company needs to repair or replace equipment on the line.

Student Loans Preventing Nearly 20 Percent of Millennials from Buying a Home

A survey commissioned by Bankrate.com found that about one in five millennials say that student loan debt is holding them back from homeownership, Bloomberg News reported. In addition, almost two-thirds of millennial homeowners (ages 23-38) have buyer’s remorse over their home purchase. The most common regret among millennials is that they did not adequately anticipate unexpected maintenance costs. For those who don’t own a home, cost is the largest barrier to becoming a homeowner. About half of respondents said they don’t have enough income, while 41 percent cannot afford a down payment and the closing costs involved in the purchase. A third of respondents said that home prices are simply too high.

`Private Credit Glut' Hints at M&A Wave for $770 Billion Market

Some of the world’s largest investment firms are preparing for a shakeout in the $770 billion market for private debt, making it a prime target for takeovers, Bloomberg News reported. Private-equity managers, many of whom had piled into lending when banks cut back risks after the 2008 financial crisis, say the market has become so competitive that it will be increasingly difficult for smaller firms to raise money. Meeting at this week’s SuperReturn International conference in Berlin, executives were asking whether there’s a “private credit glut” after assets nearly tripled in the past decade. Private credit has been a key growth area for firms such as Blackstone Group LP, KKR & Co. and Carlyle. Their capital has helped firms find financing even if they are too small or high risk for the public-debt markets. These borrowers typically pay a premium, and the yield on offer has attracted swathes of investment in recent years. But with interest rates moving higher and signs of an economic slowdown mounting, the market is getting tougher. Overall, $110 billion was raised in 2018, coming down from a record $129 billion the year before. The proportion of capital raised by first-time fund managers fell to an all-time low last year, according to Preqin Ltd.

ASM Panel Spotlight: Commission to Release Final Report of Recommendations to Improve the Consumer Bankruptcy System

You won't want to miss the release of the ABI Commission on Consumer Bankruptcy's Final Report and Recommendations at the Annual Spring Meeting, being held April 11-14. The Final Report focuses on reducing barriers to entry for consumer bankruptcy, enhancing the fresh start and making chapter 13 work for all stakeholders. Make sure to attend and find out the Commission’s recommendations for improving the consumer bankruptcy system!



ABI's ASM this April features 30 sessions with expert speakers analyzing important bankruptcy cases and issues. Legendary journalist and author Bob Woodward will deliver a keynote to provide the pulse of D.C., and a live broadcast of “Eye on Bankruptcy” will examine the national security implications of foreign exfiltration of high-tech assets through bankruptcy. These are just some of the many reasons to join us at ASM. Register here.

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