Second half of year is potential refinancing trouble spot, Moody's says

New York, Feb. 5 - The second half of 2003 could be a refinancing trouble spot, according to Moody's Investors Service.

During that six-month period $28 billion of junk-rated debt comes due, the rating agency said. By comparison, maturities in the first half of the year total $17 billion.

Of the total $28 billion maturing in the second half, $4.7 billion is rated below Ba3, Moody's added. For the first half, $2.6 billion of the total is rated lower than Ba3.

"Essentially, the second half of the year will be a larger challenge for refinancing given the risk that continued economic uncertainty will drive a flight to quality among investors," said Moody's vice president and senior analyst Paul Aran in a report on upcoming refinancing risk.

Of the $45 billion of speculative-grade debt maturing in 2003 as a whole, 19% is convertible bonds.

Overall, for the next three years $165 billion of junk-rated corporate bonds and bank debt comes due, Moody's said.

Most of this total - $100 billion - is bank debt, which lowers the risk somewhat since most is rated in the Ba zone, the upper end of the range of high-yield ratings, thanks to its senior status in the capital structure.

After 2003, $51 billion of high-yield borrowings matures in 2004 and $69 billion in 2005.

Moody's also noted that $16 billion of the $65 billion in bonds maturing through 2005 is rated Caa or lower.

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