Moody’s Boosts Default Forecasts as Global Trade War Heats Up

Moody’s Ratings is boosting its forecast for defaults this year as escalating trade wars globally are increasingly likely to weigh on economic growth and make financing harder to get.

The credit-grading firm said it now sees the default rate for speculative-grade companies reaching 3.1% by the end of the year, compared with its prior expectation of 2.5%. If that forecast materializes, it would still amount to a decline in the default rate from the year prior, but Moody’s says it wouldn’t take a major negative shock for the rate to rise instead, possibly to as high as 6%.