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.
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“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.
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Moody’s has forecast that the U.S. default rate will peak around 14.5% in November. [via Reuters]
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