Legg Mason: US corporate credit ratings – more down than up


Legg Mason: US corporate credit ratings – more down than up

Despite the gloss of Wall Street’s recent stock market records, the financial health of US companies shows a less rosy picture: the ratio of US corporate credit rating upgrades versus downgrades is still below zero as, so far this year, more companies (694) have been downgraded than upgraded (552), according to Bloomberg data.

The resulting 0.8 ratio, however, is better than last year’s 0.62, but still a reflection of rising corporate leverage: the Standard & Poor’s 500 Index average total debt-to-total equity ratio, for instance, has climbed to a current 113.6, up from 105.4 in 2014. With both Investment Grade and High Yield spreads at three-year lows, some investors seeking yield and returns have fled to traditionally less explored parts of the market, such as Emerging Markets, High Yield or bank loans.

Legg Mason: US corporate credit ratings – more down than up

 

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