EXCLUSIVE – Moody is preparing for a global mass cut of companies affected by the virus


Moody’s New York Credit Ratings Agency Logo – image from Reuters archive.

LONDON (Reuters) – Moody’s credit rating agency is conducting a global review of its corporate rankings in the light of the Corona virus and falling oil prices, as the first mass wave of ratings cuts or cut warnings is expected in the coming days.

Two of the company’s senior analysts told Reuters it had already started the process in a number of the worst affected sectors such as aviation, shipping and oil companies, but the steps are in the process of accelerating.

“We are working on a global review of the classifications affected by the virus,” said Ann Van Bragg, director-general for global planning and research, and Christina Badgate, assistant director-general for corporate finance research.

“By the end of the week, we will have a fair amount of taxonomic procedures,” Van Bragg said, adding that it is expected to affect entire groups of companies or sectors.

Earlier this week, Moody’s said that about 9 percent of the 920 credit-rated companies in Europe, the Middle East and Africa were “highly exposed” to the effects of the Coruna virus outbreak, while another 54 percent were moderately exposed.

It also estimates that approximately 16 percent of North American credit-rated companies, whose number exceeds two thousand, will be at great risk of a change in the classification according to the perception of the global recession is currently highly expected.

“We have the virus and the significant drop in commodity prices and now (the pressure is) in the financial markets,” said Budget. This combination of events is unprecedented, so we have to approach it from many different angles. ”

The first wave of cuts may take a few weeks. Likewise, sectors such as aviation, oil and gas, travel and freight, and hotels and entertainment will also be highly affected.

“Some of the larger companies that are under pressure may benefit from exceptional government support – in those cases, that may soften the rating procedures,” Van Bragg said.

Prepared by Mahmoud Salama for the Arabic Bulletin – Edited by Ahmed Elhamy


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