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Research Announcement:

Moody's – B3 Negative and Lower Corporate Ratings List hits highest tally on coronavirus outbreak

15 April 2020

New York, April 15, 2020 --

• The number of companies with B3 or lower ratings reached highest tally recorded amid confluence of exogenous credit shocks

• Rating downgrades have occurred across the board, with the Services, Oil & Gas, Gaming, and Restaurant sectors being the biggest contributors to the list

Moody's Investors Service's B3 Negative and Lower Corporate Ratings List has reached its highest tally recorded amid coronavirus-driven turmoil, the rating agency said in a report released today. The list now numbers 311 companies, surpassing its former peak of 291 companies reached during the 2009 credit crisis and the 2016 commodity-related downturn.

"A total of 133 companies have joined the B3 Negative and Lower Corporate Ratings List since the start of 2020, while 110 were added in March alone," said Julia Chursin, a Moody's assistant vice president. "The list now accounts for 20.7% of the total Moody's-rated speculative-grade population, up from a long-term average of 14.8%, with the spike due to a confluence of factors, namely the coronavirus outbreak, plunging oil prices and mounting recessionary conditions."

According to Chursin, defaults accounted for more than half of the rating actions that caused companies to leave the B3 Negative and Lower Corporate Ratings List in the first quarter of 2020. These occurred mainly in the Oil & Gas sector, followed by Retail and Media. Moody's forecasts that the US default rate could climb to 14.4% in a year from now, while under more pessimistic conditions it could reach 17.7%.

Alongside Moody's B3 Negative list, the rating agency's proprietary B3N indicator wrapped up Q1 2020 by sharply swinging to unfavorable territory with the score of 4.2, up from a significantly more benign reading of 2.2 recorded at the end of 2019. The increase in the overall score was driven by a sharp surge in the share of B3N list as a percentage of total spec-grade population, a greater presence of companies with the weakest liquidity rating of SGL-4 on the List, and a much worse 3-year default forecast for this population, at 43%.

For more research and insight on the coronavirus (COVID-19) outbreak, please see moodys.com/coronavirus.

Subscribers can access the report, "Moody's B3 Negative and Lower Corporate Ratings List: List hits new record amid coronavirus-driven turmoil, signals rising defaults ahead," at: http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1223049

NOTE TO JOURNALISTS ONLY: For more information, please call one of our global press information hotlines: New York +1-212-553-0376, London +44-20-7772-5456, Tokyo +813-5408-4110, Hong Kong +852-3758-1350, Sydney +61-2-9270-8141, Mexico City 001-888-779-5833, São Paulo 0800-891-2518, or Buenos Aires 0800-666-3506. You can also email us at mediarelations@moodys.com or visit our web site at www.moodys.com.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Julia Chursin
AVP-Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

David Keisman
Senior Vice President
Corporate Finance Group
Moody's Investors Service, Inc.
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

Christina Padgett
Associate Managing Director
Corporate Finance Group
Moody's Investors Service, Inc.
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

Releasing Office :
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

© 2020 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

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