Companies’ risk of running out of cash at the highest level since 2002

Moody’s today reported that the number of companies is at risk of running out of cash is expected to rise and will be the highest level since October 2002 due to consumer weakened amid global credit tightening and raising job losses number.

The number of companies which got SGL-4 rating rose 1.4%, from 12 % in September to 14% in October. SGL-4 is a Moody’s lowest level rating for liquidity valuation. Access to credit to be more difficult because banks are concerning to raise its reserves after banks writedown almost $1 trillion in CDS losses since 2007 when mortgage market was starting to meltdown.

Moody’s also expected that General Motor will continue to face liquidity problems through 2009. Moody’s also cut the company’s liquidity rating from SGL-4 to SGL-2. While Ford’s rating which has $29.6 billion of cash was cut from SGL-4 to SGL-3.

Click the image to enlargeDCM Highlight –Increasing Number of Issuers Under
Moody’s Worst Speculative Grade Liquidity Rating (SGL-4)
Sources :

Bloomberg: Cash-Strapped Companies Grow to Record, Moody's Says (Update1), November 17, 2008 15:53 EST
piperjaffray.com: Piper Jaffray Debt Capital Market Update, August 04, 2008

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