Ongoing financial weakness in the energy sector continues to intensify pressure on corporate liquidity, Moody’s Investors Service announced on Monday.
A “slew of downgrades” in the energy sector pushed Moody’s liquidity stress index (LSI) to 10.3% in March, up from 9.0% in February, the New York City-based credit rating says in its announcement. Indeed, the rise in liquidity pressure is heavily concentrated in the energy sector, Moody’s notes, as the energy sector LSI jumped to a record high of 31.6% in the month.
“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,” says John Puchalla, senior vice president at Moody’s, in a statement. “The difference in this cycle is that weakness in energy is fueling the gains, rather than broader liquidity pressures.”
Moody’s reports that the non-oil and gas LSI rose to 4.8% in March from 4.1% in February; which remains below its long-term average of 6.5%.