ECONOMYnews

Junk Loan Alarm: Citycon Ditches Moody’s as Credit Rating Takes a Dive

Citycon, a real estate investment company, had its credit rating lowered by Moody’s to the junk loan category. This means that Citycon’s creditworthiness is now considered to be of low quality and subject to high credit risk. As a result, Citycon terminated its contract with Moody’s. This is a significant development for Citycon, as it may make it more difficult and expensive for the company to borrow money in the future. The downgrade in credit rating is a reflection of the funding squeeze that Citycon is currently experiencing.

Junk credit ratings can have significant consequences for companies, including:

Higher borrowing costs: Companies with junk credit ratings may have to pay higher interest rates to borrow money, as lenders view them as riskier borrowers.

Difficulty accessing credit: Companies with junk credit ratings may find it more difficult to borrow money, as lenders may be less willing to lend to them.

Negative impact on stock price: A downgrade in credit rating can lead to a decline in a company’s stock price, as investors may view the company as less creditworthy.
Negative impact on reputation: A downgrade in credit rating can also damage a company’s reputation, as it may be seen as a sign of financial weakness.

Risk of default: Companies with junk credit ratings are at a higher risk of defaulting on their debt than companies with investment-grade credit ratings.

Overall, a junk credit rating can make it more difficult and expensive for a company to raise capital and can negatively impact its financial health and reputation.

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