After GE, investors are watching these debt-laden companies

Bloomberg

The good times are coming to an end in the corporate debt market, and the turmoil in General Electric Co (GE) credit is a sign that things can get much worse.
That’s what a growing chorus of money managers are saying. About half of the $5 trillion market for investment-grade bonds now resides in the lowest tier of ratings. Many investors fear that as global economic growth shows signs of slowing, the rosy assumptions built into companies’ profit forecasts could prove wrong, and at least some of the lowest-rated high-grade debt may end up getting cut to junk.
Blue-chip company debt has been clobbered, and is on track for its worst year since 2008. One of the biggest whipping boys in corporate bond markets was GE, which is facing weak demand for gas turbines, high debt levels and a federal accounting probe.
These are some other corporate borrowers that are on money managers’ radars as the market weakens:

ANHEUSER-BUSCH INBEV NV
Moody’s Investors Service had said that it may downgrade the world’s biggest brewer, citing the company’s large debt load. AB InBev’s liabilities mushroomed as part of its 2016 acquisition of competitor SABMiller Plc, with borrowings equal to 5.4 times a measure of earnings known as Ebitda as of June 30. Moody’s said it expected that metric to be closer to 4 times now.
FORD MOTOR CO
The only Detroit automaker to avoid bankruptcy during the financial crisis, Ford has since fallen out of favour as investors worry about how higher steel tariffs and slowing sales will weigh on its profits. The company’s debt is trading like it’s speculative-grade, even though it’s rated one step above junk by Moody’s and two steps by S&P Global Ratings. Ford says it’s committed to maintaining investment-grade ratings, but investors fear the company could return to high-yield territory
as it’s fighting a “multiple-front war” including slowing sales growth in China and higher costs in US from global trade disputes.

CAMPBELL SOUP CO
Campbell Soup more than doubled its debt load to nearly $10 billion with its acquisition of Snyder’s-Lance Inc, pushing leverage to over 5 times Ebitda. The company’s deleveraging path has hit a few road bumps, with its CEO unexpectedly resigning in May and company forecasting earnings below analyst expectations. Facing a potential downgrade to junk, Campbell said it would pay down debt by selling assets, which has at least removed the downgrade review from Moody’s (though it’s still rated Baa2, or two steps above high yield, with a negative outlook).

KEURIG DR PEPPER INC
When Dr Pepper Snapple Group Inc combined with Keurig Green Mountain Inc in July, the merged company was left with around $17 billion of borrowings, which Moody’s estimated would be 5.6 times company’s Ebitda. Keurig Dr Pepper has said it will lower leverage to under 3 times in two to three years from closing of the merger, but analysts have been skeptical that such an aggressive timeline is achievable. In its first quarter reporting earnings as a joint company, Keurig Dr Pepper said it has repaid about $550 million of debt since the deal closed.