Worries Mounting Over Corporate Debt

Posted by: Ben Steverman on September 2, 2008

By Emily Thornton

The pain from Corporate America’s debt binge over the last several years appears to be far from over, judging from a report put out today by Diane Vazza, a managing director of Standard & Poor’s. (Like BusinessWeek, Standard & Poor’s is a division of McGraw-Hill Companies.)

About 25% of American companies’ debt ratings are now at risk of being downgraded, according to Vazza’s report. That’s the highest ratio since 26% of companies had a negative outlook or were put on Credit Watch with negative implications in December 2003. “The proportion of issuers listed with a negative bias is currently at more elevated levels than ever recorded in this credit cycle,” Vazza writes. Companies are most vulnerable in the forest products and building materials, mortgage, automotive, and media industries.

Reader Comments

Squeezebox

September 5, 2008 4:00 PM

Remember the 1990's when you couldn't carry too much debt? Leverage was used to supercharge earnings, so everyone was doing it. Now the chickens have come home to roost. Of course, stocks have changed hands several times in the last ten years, and the people who benefitted from the debt binge aren't around to share the pain.

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About

Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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