U.S. corporations saw worst year for credit quality since 1991, Moody's says

New York, Jan. 7 - U.S. corporations suffered their worst year for credit quality in 2001 since 1991, according to a new report by Moody's Investors Service.

During last year, downgrades outnumbered upgrades by 2.9:1, the worst performance since 1991, when the ratio was the same 2.9:1 level.

A total of 645 corporations were downgraded in 2001 affecting $936 billion of debt while 219 were upgraded affecting $420 billion of debt, Moody's said.

Of this total, junk-rated issuers accounted for 409 of the downgrades and $361 billion of the debt lowered while 115 speculative-grade ratings were upgraded, affecting $75 billion.

Moody's attributed the poor credit performance to rapid increases in corporate debt and overly optimistic profit forecasts in the late 1990s coupled with a sharp decline in corporate earnings this year, as well as special events such as the terrorist attacks of Sept. 11.

Review and outlook changes indicate credit quality will continue to deteriorate, Moody's added.

The industrial and utility sectors were the weakest during the year. Industrials saw 548 downgrades and just 136 upgrades. Utilities accounted for 54 downgrades and 27 upgrades.

However financial institutions saw a positive ratio, managing to record 56 upgrades against 43 downgrades.

The year saw a record number of fallen angels, at 60, with $153 billion of debt, Moody's said. There were 25 rising stars with $31 billion of debt.

End

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.