Daily News: August 21, 2018

Moody’s Predicts Lower Recovery Rates Will Lead to Defaults


The Wall Street Journal reported that Moody’s has predicted increased demand for floating-rate leveraged loans has eroded credit quality and will lead to more defaults and lower recovery rates in an economic downturn.

According to the Journal, Moody’s contended the prevalence of senior loan-only structures, which lack a cushion of junior debt, will be a major factor in lower recovery rates and could produce an extended default cycle.