Corporate America’s credit quality collapsed in the first quarter, with Moody’s Investors Service downgrading an estimated $1.76 trillion of debt, a record high, the rating agency said on Wednesday.
The downgrades included a record number to the lowest rating categories, signaling the approach of the worst defaults since at least World War Two, Moody’s chief economist John Lonski said in an interview.
“The most prominent new driving force behind credit rating reductions would be deterioration of commercial real estate,” Lonski said. That is taking a toll on regional banks and companies that manufacture equipment and material used in construction, he said.
Moody’s has forecast that the U.S. default rate will peak around 14.5% in November. [via Reuters]
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