By  on January 5, 2018

Expect defaults of junk-rated retail debt to peak in March, before easing for the rest of the year, according to a new Moody’s Investors Service report.

The credit ratings agency said the retail and apparel sector saw 11 defaults in 2017, compared with seven in 2009 at the peak of the recession. It also said downgrades in credit ratings shot up 87 percent last year from 2016. And while the number of distressed firms — at “Caa1” and lower — are up, paving the way for more possible defaults ahead, the ratings agency said it expects speculative retail defaults to peak at 11 percent in March before dropping sharply to 5 percent in October. Moody’s also attributed the easing in defaults to retailers building out the required infrastructure to meet the shift to online, while reducing overall costs.

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