Over-leveraged companies face catastrophic spike in defaults, Moody's warns
Companies are piling on debt and making themselves vulnerable to the next economic downturn, Moody's has warned.
The credit ratings agency said that covenants on leveraged loans, which are designed to protect investors from firms defaulting, had weakened to their lowest level ever seen in Europe.
Covenants lay out limits on how much more debt a company can take on.
“A tight covenant structure is good for lenders. Because it inhibits the company from taking certain actions to the detriment of lenders. A loose covenant structure is generally credit negative,” said Peter Firth of Moody’s.
Over-leveraged companies face catastrophic spike in defaults, Moody's warns
--
Get ready for the collapse!
HTH
Father
Companies are piling on debt and making themselves vulnerable to the next economic downturn, Moody's has warned.
The credit ratings agency said that covenants on leveraged loans, which are designed to protect investors from firms defaulting, had weakened to their lowest level ever seen in Europe.
Covenants lay out limits on how much more debt a company can take on.
“A tight covenant structure is good for lenders. Because it inhibits the company from taking certain actions to the detriment of lenders. A loose covenant structure is generally credit negative,” said Peter Firth of Moody’s.
Over-leveraged companies face catastrophic spike in defaults, Moody's warns
--
Get ready for the collapse!
HTH
Father
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