Fitch cut nearly $300 bln of corporate bonds in Q3
NEW YORK, Nov 19 (Reuters) - Fitch Ratings cut ratings on nearly $300 billion worth of U.S. corporate bonds in the third quarter, and more downgrades may be on the way as half a trillion dollars worth of debt matures in 2009, the rating company said on Wednesday.
Most of the third-quarter downgrades occurred in the financial sector, including $258.5 billion worth of cuts, or 87 percent out of $296.7 billion in total downgrades.
"Unprecedented stress in the financial sector and fear of a prolonged economic recession have pushed up corporate borrowing costs to extraordinary levels," said Mariarosa Verde, a Fitch managing director.
Cuts of industrial companies made up another $38.2 billion of the third-quarter downgrades.
Anxiety surrounding the collapse or emergency rescue of major U.S. financial institutions also caused new issuance to drop 71 percent in the quarter. New bond sales totaled just $80.8 billion, compared with $275.5 billion in the second quarter, Fitch said.
The bond sale decline poses new problems for 2009, as some companies face maturing bonds that must be rolled over in tough market conditions.
Fitch Ratings said about $502.7 billion in bonds coming due in 2009 may be subject to "substantially higher refinancing rates," the report said.
Some $473.4 billion in investment-grade bonds are due to mature in 2009 and $29.4 billion in speculative-grade bonds. The investment-grade maturities are concentrated in the financial sector, at $387.7 billion, Fitch said. (Reporting by Walden Siew; Editing by Jonathan Oatis)
