- Fallout from the upheaval in U.S. regional banks has further squeezed borrowers south of the border.
- This is a key concern for commercial real estate investors, since smaller U.S. banks are particularly active in this space.
- American companies are less reliant on bank loans than they are on other market-based funding sources like bonds and equities.
- But higher interest rates, wider spreads, and weaker equity markets have made those sources less attractive as well.
- Bottom line: The U.S. Federal Reserve’s aggressive tightening cycle has made borrowing tougher across the board. This will hinder American businesses looking to invest in operations—at a time when labour shortages make these productivity-enhancing moves critical. We expect business investment to remain sluggish this year but look for a modest recovery in 2024.
A wave of bank failures created a ripple effect in U.S….
Read more at thoughtleadership.rbc.com