Rising Debt Burdens
Weak earnings and solvency concerns will weigh on hard-hit companies and governments; higher debt levels and more relaxed underwriting will erode the positive effects of historically low interest rates on debt-servicing capacity.
  • SUMMARY
  • REPORTS

  • SECTOR IN-DEPTH
    23 Feb 2021|Moody's Investors Service
    Years of adding debt in a low-interest-rate environment has left many large US utility holding companies with little financial cushion to withstand external shocks. Eleven of the 25 largest investment-grade utility holding companies have three-year average ratios of funds from operations to debt that are below the threshold we have indicated for a possible downgrade.

    DATA REPORT
    08 Feb 2021|Moody's Investors Service
    Three rated companies globally defaulted in January, significantly lower than the 15 defaults recorded in December, and the trailing 12-month global speculative-grade default rate edged down to 6.7% from 6.8%. Our Credit Transition Model now forecasts that the default rate will fall to 4.2% by the end of the year on expectations of continued economic recovery.

    OUTLOOK
    28 Jan 2021|Moody's Investors Service
    The global roster of corporate industry sector outlooks turned mildly positive as 2020 ended. Uncertainty still runs high despite expectations for 2021 to be a better year than 2020, although not 2019.

    SECTOR IN-DEPTH
    28 Jan 2021|Moody's Investors Service
    Oil and gas, retail, and business services had the most defaults in 2020. We expect the trailing 12-month global corporate speculative-grade default rate to peak at 7.3% in March, then decline to 4.7% by year-end. If these forecasts crystalize, the pandemic-induced default cycle will be relatively mild compared with prior recessionary default cycles, when peaks ranged from 9.7% to 13.3%.

    SECTOR IN-DEPTH
    25 Jan 2021|Moody's Investors Service
    The fundamental credit quality of low-rated companies will remain strained, particularly in sectors that the pandemic has hurt the most. The reliance on additional liquidity likely will persist this year for those companies confronting looming debt maturities as they try to stave off default.

    DATA REPORT
    12 Jan 2021|Moody's Investors Service
    The number of corporate defaults globally totaled 209 in 2020, nearly double the count in 2019, with the oil and gas, business services and retail sectors accounting for the most defaults. The trailing 12-month global speculative-grade default rate was 6.6% at the end of December and will climb to 7.3% in March before falling to 4.7% at the end of 2021 under our baseline forecasts.
    SECTOR IN-DEPTH
    17 Dec 2020|Moody's Investors Service
    Issuers with lower credit quality in consumer-sensitive sectors and those with weak liquidity would be most vulnerable in a scenario of broadly renewed global coronavirus lockdowns that are similar to those in the spring in terms of stringency and effects on economic growth. 

    SECTOR COMMENT
    17 Nov 2020|Moody's Investors Service
    Eroded credit protections, including covenants, enable distressed borrowers to incur debt on terms detrimental to existing investors, making litigation and brinkmanship more likely.

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    OUTLOOK
    09 Nov 2020|Moody's Investors Service
    Global credit conditions will improve overall in 2021, aided by unprecedented COVID-19-related fiscal and monetary policy support. However, the initial rapid economic rebound is giving way to a patchier, more tenuous recovery as the pandemic proves hard to contain. Six key themes will shape the credit environment in the year ahead: Uneven recovery, policy challenges, rising debt burdens, digital transformation, environmental impact and social trends.
    PODCAST
    09 Nov 2020|Moody's Investors Service
    Anne Van Praagh and Michael Taylor of the Credit Strategy & Research team discuss six key trends that will affect the credit landscape as the world deals with the coronavirus crisis. These include an uneven and inconsistent economic recovery, sharply higher corporate and sovereign debt loads and numerous policy challenges for governments as they grapple with the economic and social consequences of the pandemic.