Saturday, May 26, 2018

Moody's Warns: Spectacular Wave of Corporate Bond Defaults Coming

The ratings agency, Moody's, has just issued a big time warning.

It says low interest rates and investor appetite for yield has pushed companies into issuing mounds of debt that offer comparatively low levels of protection for investors. While the near-term outlook for credit is "benign," that won't be the case when the next recession hits.

The "prolonged environment of low growth and low interest rates has been a catalyst for striking changes in nonfinancial corporate credit quality," Mariarosa Verde, Moody's senior credit officer, said in a report. "The record number of highly leveraged companies has set the stage for a particularly large wave of defaults when the next period of broad economic stress eventually arrives."


(via CNBC)

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