DOW JONES NEWSWIRES
Declining cash balances and near-term debt obligations continue
to test many speculative-grade issuers, leading to a
record-matching number of liquidity-rating downgrades in February,
Moody's Investors Service said Thursday.
"The continued rise in the liquidity stress index is a strong
signal of rising defaults in the year ahead," said Moody's Vice
President John Puchalla.
The strained credit environment has made it hard for many
companies to refinance existing debt or to obtain new financing.
Moody's said speculative-grade companies will be hard-pressed to
repay a record $190 billion in maturing bank loans and bonds by
2011.
Overall, rated debt by these issuers reached about $217.5
billion in February, up 17% from January and nearly eight times
higher than a year ago. The figure was driven, in part, by
downgrades to U.S. auto makers General Motors Corp. (GM) and Ford
Motor Co. (F) and cable operator Charter Communications Inc.
(CHTR).
The Moody's Liquidity-Stress Index, which tracks the ratio of
issuers with the lowest liquidity rating on the speculative-grade
liquidity scale, rose for the fifth consecutive month in
February.
At the end of the month, 96 companies had the lowest-possible
liquidity rating, the latest monthly record which Moody's expects
to continue in March. As of March 18, the figure had climbed to
103.
Moody's assigned speculative-grade liquidity ratings to 512
issuers covering about $1.16 trillion of rated debt at the end of
February, with a majority of the ratings on U.S.-based issuers.
-By John Kell, Dow Jones Newswires; 201-938-5285;
john.kell@dowjones.com