The number of companies that could potentially fall into junk territory dropped to around 35 in the first quarter after 15 firms saw their ratings cut to sub-investment-grade, according to Moody’s.
Below are some highlights from the report.
- There are now 63 non-financial companies in the so-called crossover zone, with either the potential to fall into junk or rise out of sub-investment-grade territory.
- That is 17 less than the prior quarter and below the average of around 68 over the past three years
- The drop in numbers was due to 22 companies leaving the crossover zone during the recent quarter.
- Fifteen become fallen angels, seven saw their outlooks changed to stable and eight become potential fallen angels. Five companies also became potential rising stars.
- The 35 potential fallen angels now left in the crossover zone held US$160bn of debt as of March 31, down from the US$220bn seen in December and below the four-year average of US$235bn.
- US companies in the zone now hold US$79bn of debt, 32% below the record US$117bn seen in the third quarter of 2018, largely thanks to PG&E leaving the zone.
