Nevertheless, according to Morgan Stanley, a measure of a companies’ ability to repay their debt was 9.4 at the end of the first quarter, compared to 8.5 at the end of 2009 – a higher reading corresponds to a company’s ability to pay back loans. Moody’s Investors Service points out that default rates remain low, with 1.85% of U.S. junk-rated companies defaulting in the year ended Aug. 31, compared to 14.1% at the end of 2009.
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For more information on corporate debt, visit our corporate bonds category.
Max Chen contributed to this article. Tom Lydon’s clients own shares of HYG, JNK and LQD.