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As the economic impact of the coronavirus has significantly impacted corporate revenues and earnings, two (2)...

As the economic impact of the coronavirus has significantly impacted corporate revenues and earnings, two (2) funding sources - bond issuance and bank loans have had dramatic interest rate reductions. Explain why some companies are lowering their funding costs while others are not.

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Answer #1

In this coronavirus situation, corporate revenue and earnings are falling significantly. There has been reduction in loan funding from bank.

Some companies are Borrowings fund from banks at lower interest rates in order to meet their working capital requirements. But some of the companies are not getting impacted due to this situation For eg. Education industry, pharmaceuticals industry, e-commerce companies etc.

As this situation is impacting some of the companies, they are focusing on lowering their funding costs. While those which are not getting impacted, they are not focusing on lowering the funding costs.

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