Illustration: Aïda Amer/Axios

Both Moody's and S&P Global downgraded PG&E from investment grade to junk this week, meaning the California utility is likely in for some major upheaval.

Why it matters: PG&E's problems are unique, but the company's recent trouble highlights a growing risk in the credit market for companies that technically have investment grade debt, but are teetering on the brink of junk status. A weakening economic and credit cycle could spark a slew of downgrades, with half of investment-grade debt in the lowest-rated rank.

The number of companies with debt just one level above junk has swelled 247% since the end of 2007, faster than the 190% increase for the overall credit market. But so far, only 7% of these companies has been downgraded, according to Fitch Ratings.

  • A downgrade would make it pricier for companies to tap into capital markets, which some rely on for growth and others just to keep things running. A downgrade to junk can also force fund managers who only hold investment grade debt to sell, and high-yield managers might not be interested until the price falls further.

The bottom line: Corporations have ratcheted up their debt load to the tune of $9 trillion since the financial crisis, thanks to easy money and a long period of low interest rates. S&P Global analysts noted recently that the booming credit cycle is "in its later stages."

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China-Iran deal envisions massive investments from Beijing

Illustration: Aïda Amer/Axios

China and Iran have negotiated a deal that would see massive investments flow into Iran, oil flow out, and collaboration increase on defense and intelligence.

Why it matters: If the proposals become reality, Chinese cash, telecom infrastructure, railways and ports could offer new life to Iran’s sanctions-choked economy — or, critics fear, leave it inescapably beholden to Beijing.

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Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 7 p.m. ET: 13,048,249 — Total deaths: 571,685 — Total recoveries — 7,215,865Map.
  2. U.S.: Total confirmed cases as of 7 p.m. ET: 3,353,348— Total deaths: 135,524 — Total recoveries: 1,031,856 — Total tested: 40,282,176Map.
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  5. Education: Los Angeles schools' move to online learning could be a nationwide tipping point.

House Judiciary Committee releases transcript of Geoffrey Berman testimony

Geoffrey Berman. Photo: Alex Wong/Getty Images

The House Judiciary Committee on Monday released the transcript of its closed-door interview with Geoffrey Berman, the former top federal prosecutor in Manhattan who was forced out by Attorney General Bill Barr last month.

Why it matters: House Democrats have seized on Berman's testimony, in which he claimed the attorney general sought to "entice" him into resigning so that he could be replaced by SEC chairman Jay Clayton, to bolster allegations that the Justice Department has been politicized under Barr.