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Moody’s prepares to downgrade virus impacted companies

Moody’s is carrying out a global review of its corporate ratings in light of the coronavirus and oil price slump, with a first wave of downgrades or warnings likely in the coming days.

The firm has already begun the process in a number of the hardest hit sectors such as airlines, cruise and oil firms, but the moves are about to ratchet up, two of the firm’s top analysts told Reuters.

Earlier this week Moody’s said that about 9% of the 920 companies it rated in Europe, the Middle East and Africa had a “high exposure” to the effects of the coronavirus outbreak, with another 54% having moderate exposure.

The first flurry of downgrades could take a few weeks. As well as sectors like airlines, oil and gas and travel, shipping, hotels and entertainment and leisure will all be heavily impacted too.

Firms with weaker finances already in the junk grade, of high yield category as it is also potentially see multi-notch downgrades, while on the flip side government support, if strong enough, could potentially spare others.