U.S. Banks Expect Rise in Energy-Sector Loan Defaults

The Wall Street Journal (online registration required): Banks in the U.S. are cutting credit lines to energy companies and forcing firms to cough up more collateral to guard against fallout from the past year’s plunge in oil prices, a Federal Reserve survey found.

Banks expect more delinquencies and charge-offs from the sector over the course of this year, “but they indicated that their exposures were small, and that they were undertaking a number of actions to mitigate the risk of loan losses,” senior loan officers at commercial banks told the Fed in a survey tracking changes in loan terms and standards in the first quarter of the year.

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