Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jon Koplik who wrote (5236)	12/10/2001 1:56:39 PM
From: John Pitera	Read Replies (2) \| Respond to of 33421

Hi Jon, Good article. If the Fed had not been this aggressive on cutting rates, then I wonder how much higher borrowing costs would be for the corporate sector. Even companies with the richest credit ratings are not getting any major breaks from this soft money environment. Moody's Investor Service's composite of top corporate bonds yielded about 7.8 percent this week, which is almost the same as in early January when the central bank began cutting. "This is one of the dilemmas," says Riley. "But it's not an unusual circumstance at this juncture of an economic down cycle because banks are always reluctant to lend when credit standards are falling." A sign that the list of corporate deadbeats is growing is that more companies' credit ratings are being downgraded than upgraded by rating agencies such as Moody's. The companies' problems in getting their hands on new money could not come at a worse time. Their earnings have evaporated since the fourth quarter of 2000 and this has robbed them of their much-needed cash flows.