New York construction stoppage increases industry debt risk – idealista / news

The stoppage of all non-essential activity In the great economies of the world it is posing a serious problem for the activity of thousands of companies, with total or partial dismissals of employees, the inability to pay suppliers, or the consequent debts that they are acquiring with the banks as they cannot cope with loans. A great example is the construction sector in New York (USA).

This sector in the most populated city of the largest economy in the world moves about 66,000 million dollars, about 60,000 million euros to the current change. And right now it is suffering the highest numbers of infected and deceased by the coronavirus pandemic In U.S.A. In order to stop it, the state and national authorities have decreed the confinement and paralysis of all non-essential activities, including construction.

Right at closure of activity decreed until the end of April, more than 450 construction sites, among which are important projects such as the Hudson Square macro-operation, the luxury apartments in Billionaires’ Row or the transformation of the area around Grand Central Terminal.

The completion deadlines of these buildings are suffering serious delays, which is also assuming deferrals in payments to suppliers and contractors. But also the lending banks fear arrears in the payment of the outstanding loans on the part of the promoter companies.

Wells Fargo and Deutsche Bank, Bank of New York Mellon Corp., JPMorgan Chase & Co., and Bank OZK were the top five banks offering the most construction loans in New York City in the past two years, according to Real Capital Analytics Inc. The first two have up to 8,000 million dollars, 7,300 million euros at the current exchange rate, in outstanding debts from the construction in NY. Wells Fargo is already in talks with its clients to determine the situation of its debtors.

Doubts are increasing about the future of the sector, in which projects under construction lose financing or when looking for new loans they do so in worse conditions. But the works in the project phase are also in danger, which are looking for financing to start working, and may not be able to do so.

Business is frozen

Recovery from activity is in the air, and it will not only depend on returning to activity. The production of cement and concrete, and other construction products, are also paralyzed or stored. All this coupled with a workforce that remains confined to home, and with millions of workers waiting for unemployment benefit.

“This crisis is particularly complicated due to the uncertainty about how long it will last and how the economy will react,” he said. Linda Foggie, executive of the consulting firm Turner & Townsend. “The hardest part is that this is not like a hurricane, where you know when it starts and when it ends and you have the certainty that you can start planning,” he said. “This affects everyone across the entire economy.”

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