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American Companies Are Having a Harder Time Raising Cash

Ratings Agencies in New YorkRatings Agencies in New York

U.S. companies’ ability to raise cash deteriorated further in March, signaling the risk for more defaults among junk bonds, as liquidity downgrades in the energy industry reached a record high, Moody’s Investors Service said on Monday.

The rating agency said its “Liquidity-Stress Index” (LSI) rose to 10.3% last month from 9.0% in February. Its gauge on the energy sector hit a record high of 31.6% from 27.2%.

Moody’s (MCO) projected the default rate on U.S. junk bonds would grow to 5.3% in February 2017 from 3.6% in March.

“The LSI is traveling the same path it took at the start of the last major turn in the credit cycle that started in mid-2007, which culminated with a peak in the LSI of 20.8% in March 2009,” Moody’s Senior Vice President John Puchalla said in a statement.

“The difference in this cycle is that weakness in energy is fueling the gains, rather than broader liquidity pressures,” he said.