Moody's: Worst junk debt is expanding |
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Mon, 22 Oct 2007 19:07
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NEW YORK (AP) - The pool of 'junk' debt carrying the worst possible credit quality is expanding, Moody's Investors Service wrote in a report Monday.The number of U.S. companies with the credit rating implying the weakest ability to repay its debts grew in September, Moody's said in its Speculative Grade Liquidity Monthly Monitor.As the pool of debt backed by the weakest liquidity rating expands, Moody's said more companies are going to default on their bonds.Moody's in September did not upgrade any company with a '4' liquidity rating -- the weakest possible rating -- while three companies were downgraded to that level.During the third quarter, Moody's cut the ratings of nine companies to '4' and only one was upgraded from the weakest liquidity rating.With more borrowers in the $1 trillion junk bond market falling into the weakest liquidity category, Moody's expects the default rate on junk debt to swell to 3.9 percent in September 2009 from 1.4 percent now.Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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