LONDON/NEW YORK — A wave of credit rating downgrades in the corporate sector risks deepening a funding crisis for company bosses and spreading it to other markets. A credit rating cut is a blow for a company in any circumstance, making it more expensive to raise fresh debt or refinance existing bonds. But it is potentially devastating when markets are in a panic and company cashflows are shrinking. A downgrade to 'junk' status, the lowest credit rating indicating a higher risk of default, forces investors to scatter because many asset managers cannot hold junk-rated debt. Without any willing buyers, the risk is a panicked sell-off which could also spread to other markets.

Source: International New York Times March 20, 2020 16:07 UTC