Moody's Investment Services, in a bid to jump ahead of the curve on corporate bankruptcies, has published a list of speculative-grade companies with the greatest risk of defaulting.
The Bottom Rung
is Moody's answer to those that have criticized the ratings agencies for being too slow in missing the credit problems that have plagued U.S. companies and have been responsible for the global economic downturn. The list provides ample evidence of a severe default cycle with 283 speculative-grade issuers included, compared with 157 a year ago.
Of the 283 companies listed, nearly half belong to the media, automotive, retail, manufacturing and gaming industries. Moody's said that more than 23% of all U.S. speculative-grade companies are on
the Bottom Rung
list, compared with 9% two years ago.
Among the media companies listed as probable defaults are
Sirius XM
(SIRI) - Get Report
,
Charter Communications
(CHTR) - Get Report
,
Spanish Broadcasting System
(SBSA)
,
Radio One
(ROIA)
and
Univision
.
It comes as no surprise that
General Motors
(GM) - Get Report
,
Ford
(F) - Get Report
and
Chrysler
are featured on the list as well, in addition to several other auto-related companies including
American Axle & Manufacturing
(AXL) - Get Report
,
Cooper Tire & Rubber
(CTB) - Get Report
,
Lear
(LEA) - Get Report
and
Visteon
(VC) - Get Report
.
Retailers have been especially hit hard with the drop in consumer spending, with several names already closing shops amid bankruptcy, including
Circuit City
,
Mervyn's
and
KB Toys
. Moody's cites
Bon-Ton Stores
(BONT)
,
Blockbuster
(BBI) - Get Report
,
Rite Aid
(RAD) - Get Report
,
Michael's Stores
,
Duane Reade
and
Harry & David
, among others, as those with a speculative grade rating in danger of defaulting.
Champion Enterprises
(CHB)
was among those manufacturing stocks on Moody's
the Bottom Rung
, while
MGM Mirage
(MGM) - Get Report
and
Harrah's Entertainment
were among the gaming industry companies on the list.
Several other well-recognized names were included on Moody's list, including
Palm
(PALM)
,
Eastman Kodak
(EK)
,
Advanced Micro Devices
(AMD) - Get Report
,
Hovnanian
(HOV) - Get Report
and
Six Flags
(SIX) - Get Report
.
Also included are airliners
AMR Corp.
(AMR)
,
UAL Corp.
(UAUA)
and
JetBlue Airways
(JBLU) - Get Report
.
Some of the inclusions on Moody's list have done their best to argue that bankruptcy is not a looming possibility. After completing a $530 million loan infusion from
Liberty Media
on Friday,
said that the transactions "resolve all of the uncertainty surrounding the company's and its subsidiaries' debt maturing in 2009."
Blockbuster spokeswoman Karen Raskopf told
TheStreet.com
last week that the world's largest movie-rental chain does "not intend to
."
Additionally, Eastman Kodak told
the Wall Street Journal
that any speculation about whether the company is less than financially sound is "irresponsible. Kodak is financially solid, and we are taking the right actions to ensure that we remain a strong and enduring competitor," spokesman David Lanzillo said to
the Journal
.
