Consumer spending has been bolstered by heavy mortgage refinancing and the start of federal tax cuts.
Both countries must sell government bonds to refinance heavy debt loads, but investors, spooked by recession and financial instability, are instead pulling money out of the countries.
The Mohegan Tribal Gaming Authority, which owns the Mohegan Sun resorts in Connecticut and Pennsylvania, announced a series of moves on Tuesday aimed at refinancing the heavy debt load of the casino operations.
This involved exchanging some $29.5 billion in mainly short-term debt for newly issued bonds which expire after 2005.The urgent thing was that, before the swap, Argentina had looked unable to refinance the heavy burden of debt due to expire in the next five years and would, perhaps sooner rather than later, have defaulted.
So far, consumers have performed admirably, drawing on mortgage refinancing, tax rebates and heavy borrowing at low interest rates to pay their bills.
Vicki Bryan, an analyst at Gimme Credit, an independent research service on corporate bonds, said Delta had done a good job of bolstering its balance sheet and refinancing some of its heavy debt load inherited from Northwest.
The New York-based firm has been struggling under its heavy borrowings and the deal will help it refinance the debt.
The company had a heavy debt load, and it filed to try to refinance some of its debt.
Italy, which has an even heavier debt load and is further behind on its refinancing needs for this year, is under similar stress.
Even if most of the debt does get refinanced, companies may have to pay more, if heavy government borrowing causes rates for all borrowers to rise.
