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S&P: Potential corporate debt downgrades at all-time high

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S&P Global Ratings says that potential corporate downgrades of global corporate-debt issuers reached an all-time high at the end of April, eclipsing the previous high set during the financial crisis in 2009.

In a report issued Tuesday, the ratings agency notes that 1,287 companies as of April 28 faced prospects of potential debt and issuer downgrades, impacted by the coronavirus outbreak and a virtual shutdown of the global economy this spring.

The figure is up from 860 in March, and nearly double the 649 troubled issuers from February. It tops the 1,087 issuers facing downgrades in the midst of the subprime-housing crisis.

“Out of 550 new potential downgrades since April, 90% of the ratings were affected by economic and financial consequences of the COVID-19 pandemic—led by financial institutions, consumer products and utilities sectors,” the report stated.

The issuers on the list, which include both investment-grade and speculative-grade companies, are considered higher risk of downgrade after being placed on a negative rating outlook or placed on CreditWatch – with negative implications – by the agency.

The list does not include 110 issuers that were part of March’s watch list and were subsequently downgraded. The firms were among 247 issuers whose ratings were lowered; 134 of those firms remain on watch for further downgrades, and 64% of the current list of troubled issuers continue to show risk exposure to their operations due to containment efforts meant to slow the spread of the virus.

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