We've been bracing for fallout from the corporate debt boom, which reached $9.4 trillion in the 2nd quarter. Now, this:
The number of U.S. companies whose bonds have a BBB credit rating is rising, and the risk of them being downgraded to “junk” is increasing, as they report pinched profits and lower revenue growth, Goldman Sachs analysts said in a weekly note to clients.
This chart shows net debt-to-asset ratios, a key leverage metric, climbing to almost 28% at BBB-rated companies this year, after it plunged below 16% in the wake of the global financial crisis. For some time now investors, analysts and regulators have been bracing for fallout from the corporate debt boom which reached $9.4 trillion in the second quarter.
Among investors, a chief concern is that the credit rating agencies, after showing leniency in recent years, could start cracking down on companies making slow progress on reducing their debts.
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