Defaults to Quadruple as More Companies Cut to Junk
U.S. corporate defaults probably will quadruple next year after the number of companies that lost their investment-grade credit ratings rose at the fastest pace since 2003.
Moody’s Investors Service predicts companies will default on 4.7 percent of their bonds in 2008 as the economy slows, up from 1 percent this year. Jones Apparel Group Inc., the Bristol, Pennsylvania-based maker of Nine West shoes, mortgage lender Residential Capital LLC and 31 other companies with a combined $52 billion of debt were downgraded to junk by Moody’s this year.
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