Credit-crimped companies rise to most since 2009, S&P says

(Sept 5): You’d have to go back to the months following the financial crisis to find so many companies facing potentially ruinous debt problems.

That’s according to the latest tally by S&P Global Ratings of “weakest link” issuers. S&P counted 251 with ratings at the low end of junk status and a negative outlook, the most since October 2009, when the total was 264. The issuers collectively have about US$359 billion of ($488 billion) debt outstanding, led by energy companies, according to S&P’s Sept. 1 report.

“Weakest links maintain an important role as potential default indicators,” Diane Vazza, S&P’s head of global fixed income research, said in the report. They’re almost 10 times more likely to miss payments than ordinary speculative-grade issuers, Vazza wrote, adding that 71 of 100 companies that defaulted this year had been previously tagged as weakest links.

---

Related Stories

• Emerging-market companies at risk with US$400 billion of debt due
• Punch bowl taken away, the party is ending
• China must avoid a debt-deflation spiral

---