Credit rating agencies expect a negative future
An analysis by the rating agency S&P Global on Wednesday announced that the number of companies or countries at risk of downgrading had climbed to a record high. The main reason is the coronavirus pandemic, which may be downgraded by a total of 1,287 companies according to S&P.
According to the rating agency, the outlook for companies is much worse than during the financial crisis in 2009, when 1,028 entities were endangered by the reduction. Also, S&P has downgraded almost 700 ratings in recent months due to COVID-19 disease. A total of 17 countries also have a negative outlook, from Australia with the highest AAA rating to Zambia, which is in danger of bankruptcy. One-third of all banks in developing countries also have a negative outlook.
Companies that could fall from investment grade to non-investment grade in the near future are also at their peaks. The companies that have fallen into the non-investment group are Ford, Kraft Heinz, Renault, Delta Air Lines and Macy’s.
The credit rating is currently one of the main indications of the state of companies for investors because it shows them the probability of proper repayment of loans. It has a significant effect on the willingness of creditors to lend to the State or another entity concerned, as well as on the terms of the loan, such as the interest rate.