The Coronavirus Crisis Could Wipe Out Entire Industries. These 5 Are at Risk

The Coronavirus Crisis Could Wipe Out Entire Industries. These 5 Are at Risk

The coronavirus crisis could wipe out entire industries. These 5 are at risk with half of humankind under stay-at-home orders, warned against going out. Image: MMG

Without a federal bailout, some businesses and maybe entire industries have the potential to disappear due to the coronavirus pandemic. This is not only because half of humankind is now under stay-at-home orders, warned against going out to shop, work, play and spend money on anything but the most essential things.

It’s also because a long period of low-interest rates encouraged companies to add debt, much of which will soon come due, Barrons reported.

Corporate debt hit 47 percent of gross domestic product in 2020, higher than the 45 percent it hit before the 2008 recession. More than half of investment-grade debt was rated BBB last year — almost junk — and about 30 percent of that was vulnerable to a downgrade before the coronavirus outbreak.

“The country is about to be awash in junk debt, and companies in industries from airlines to energy will face a reckoning that could force them to merge or go out of business entirely,” Avi Salzman wrote for Barrons.

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By the end of the year, the default rate on high-yield bonds is expected to rise as high as 10 percent from 2.9 percent last year, said Edward Altman, professor emeritus of finance at New York University Stern School of Business. “The number of zombie companies likely to fail within 12 months has probably doubled since the start of the year,” he said.

Here are some industries, debt-ridden or otherwise, that are at risk of wipeout from the coronavirus.