Credit fears uncalled for in many sectors

Debt is at the top of everyone's mind these days. For good reason, too. Soverign debt loads are a global concern, and European banks are teeming with bad loans.

But hold your horses, Moody's says. Most industries are actually in good shape. Of the 60 sectors that Moody's covers, 39, or 65 per cent are "materially unchanged in terms of their ability to weather future risks relative to four years ago."

Even better, 13 sectors have a better forward looking credit position than they did in 2007. These include North American retail, global oil and gas and U.S. tech. To be fair, 8 are in worse shape, including global pharma and Japanese auto makers.

How is it possible that some have better credit outlooks? Industry consolidation, cost-cutting and balance-sheet repair.

Take U.S. and European auto makers. In 2007, they were a mess, but they restructured and are now in much better shape to weather a storm. Then there are cases like North American railroads, which continued to spend on infrastructure during the recession. Now they've got the upper hand on truckers.

Contrarily, those who are worse off typically find themselves facing tougher competition. Japanese auto makers, for instance, are under seige from South Korean and resurgent U.S. auto makers.

But back to the good. Some of the stand-out sectors include oil and gas and technology. In the energy space, oil prices appear to have stabilized, whereas in 2008, even though they were strong, they ran up so quickly that it was pretty obvious they had to crash at some point. Less volatility has made the debt of these producers much less risky.

As for the tech story, it's pretty straightforward. Despite the U.S.'s economic demise, its tech sector continues to stand out. The top 20 largest cash positions of U.S. technology firms amounts to $344-billion, according to Moody's. They're just swimming in cash, and that's always a good thing for debtholders.

All of this isn't to say that credit isn't a concern. Just look at European banks. But it does show that there shouldn't be widespread panic for all companies. At least not yet.