nesting
oh those off balance sheet adventures
Think of it as nested debt: big companies, themselves reliant on debt, arbing interest expense by providing loans to smaller companies at higher rates, without declaring said loans, or as Bloomberg puts it, "small firms that can’t get loans by themselves have been winning banks over by getting other companies to guarantee their borrowings. The companies making those pledges exclude them from their balance sheets, leaving creditors in the dark. Borrowers often extend the guarantees for each other, raising the risk that failures could ricochet, at a time when increasing borrowing costs have already added to strains."
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