New Moody's Company "Dead Pool" May Wreck A Lot Of Companies

Moody’s has come out with a list of 283 companies that are at great risk of defaulting on their debt. The Wall Street Journal got a copy of the list so each of the firms can face customers, suppliers, and creditors who will have fresh questions about whether these corporations will fail.

Because they are on a list from Moody’s published by The Wall Street Journal, their fates may be sealed even though they might not have been if the list never saw the light of day.

Many of the firms on the “Bottom Rung” list, as Moody’s calls it, are clearly beyond help.  Chrysler and Rite Aid (RAD) probably fall into that category. But, some of the other firms whose names made the honor roll are likely to pull through the downturn. Of course, Moody’s has made that a bit less likely.

AMR (AMR), which is in the “Bottom Rung” has a relatively strong balance sheet. With fuel costs down, even a drop in passengers is not likely to put the company into Chapter 11. The same can probably be said for Level 3 (LVLT) and AMD (AMD). Being on the “Bottom Rung” has moved these companies into hot water.

Douglas A. McIntyre