“Hidden” Debt and Trouble for Global Economy: CNBC

Investors are alert to any signs of a global recession and decline in economic growth. A research and analytics unit under S&P Global suggests that companies that have skipped the crediting rating process in taking on debt could be signaling signs of troubles. Credit ratings provide an independent assessment on the ability to repay debt, and low interest rates and attempts by central banks to stimulate their economies encourage investments in less profitable and riskier ventures. Unrated borrowers, typically small in size, can struggle with unplanned events like the US-Chinese trade war and tariffs. “The analysis by S&P Global Market Intelligence found unrated entities in China, the U.K. and the technology sector in Asia Pacific are among the most at risk of a sudden spike in defaults,” reports Yen Nee Lee for CNBC. “Chinese firms have defaulted at an ‘unprecedented’ level this year, while the possibility of the U.K. leaving the European Union without a deal has hurt companies’ prospects…. At the same time, the technology sector in Asia Pacific has been hit by a slowdown in demand and global trade tensions.” Note: The US Federal Reserve cut the interest rate by a quarter point, a move described as “intended to insure against downside risks from weak global growth and trade tensions.” The target range for the federal funds rate is now 2.0 to 2.25 percent. – YaleGlobal

“Hidden” Debt and Trouble for Global Economy: CNBC

Companies that have taken on debt without credit ratings could be most at risk of sudden spike in defaults and signal an economic downturn
Yen Nee Lee
Wednesday, July 31, 2019

Read the article from CNBC about increasing defaults in debt that carries no credit rating.

Yen Nee Lee is a correspondent for CNBC. 

(Source: Institute of International Finance)

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