Moody's B3 negative list rises to 228

Moody's list of companies with a B3 rating and a negative outlook or lower grew in size to 228 at the end of October. Oil and gas companies now make up a full 25% of the list, compared to 23.8% a month ago. This dwarfs the sector’s historical average of 8.6%, and the 4.8% observed in the midst of the credit crisis in April 2009, when the list reached its peak of 291 companies. However, the liquidity pressure and credit weakness in the energy and commodity industries are not currently spreading broadly to other sectors. 

Again this month, the majority of companies that left the list did so because of defaults or having the ratings withdrawn. American Apparel Inc. initiated Chapter 11 bankruptcy proceedings, while Floworks International LLC, EXCO Resources Inc., and Energy XXI Gulf Coast Inc. consummated distressed exchanges. The latter two exploration and production (E&P) companies added to the surge of distressed exchanges in the oil and gas sector observed so far this year.

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