Though analysts expect fewer fallen angels and defaults this year than last, the operating environment is still challenging and many company’s financial profiles remain weak. As such the name of the game is still very much avoid the blowups.
The most worrying cases, say analysts, are those companies that need to improve cashflow to repair their balance sheet. If the economy is slow to pick up this year these will be the first casualties. But there are other potential stumbling blocks in 2003.