Analysis-Auto Sector Bankruptcies Spark Fresh Scrutiny of Wall Street Credit Risks

By Anirban Sen, Saeed Azhar and Matt Tracy
NEW YORK (Reuters) -The bankruptcies of automotive-related companies First Brands and Tricolor, along with potential losses at banks and investment funds, are raising new concerns about hidden risks in parts of the credit market — prompting investors to take a closer look at risky debt.
Auto parts supplier First Brands and subprime lender and dealership Tricolor both filed for bankruptcy protection last month. The two collapses have rattled some stakeholders in Wall Street’s multitrillion-dollar credit machinery, from leveraged loans and collateralized loan obligations (CLOs) to trade‑finance funds and subprime auto loans, raising questions about exposure levels of a number of Wall Street fund managers, which pool capital from investors to provide loans to companies.