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S & P: Uk Companies Headed For Insolvency In Record Numbers

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Big rise in companies facing serious financial difficulties

By Richard Orange

16 July 2006

MORE companies are hitting financial difficulties than at any time since 2003, according to data from ratings agency Standard & Poor’s (S&P). The figures indicate that the
global credit boom is coming to an end.
S&P’s Global Potential Fallen Angel survey, one of the key indicators of corporate financial health, reported on Friday that 25 companies gained a speculative rating in the month to July 11, putting $34bn (E26.9bn, £18.5bn) worth of debt at risk. A speculative rating downgrades their debt to junk status.
This is the first time the companies falling to speculative grade has outnumbered those climbing to investment grade for two years.
The figures explains recent moves by Goldman Sachs and Ernst & Young, among other leading institutions, to bolster their teams specialising in restructuring companies.
The report comes the same week that the
Bank of England’s Financial Stability Report gave a stark warning that London’s institutions were taking too much risk and were exposed to a financial downturn.
The Bank warned: “In the event of a sharp fall in asset prices, some of the underlying vulnerabilities in the balance sheets of corporates, households and, ultimately, financial institutions could be exposed.”
The low interest rates of the past two years have left markets awash with credit, protecting failing companies and fuelling a wave of corporate takeovers.

The warning does not get any clearer than this folks. For the property bulls--its long since time when you should have woken up and smelled the coffee.

BTW--anyone notice that there are more bearish articles in the past few days than ever? True, we have had Rightmove's dramatic "flying off the shelves" report again, but the rest of it is solidy bear stuff and extremely congenial for a hot summer's day.

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  • 312 Brexit, House prices and Summer 2020

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      • down 5% +
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      • Even
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      • up 5%

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