Debt issued by KPN, the Dutch telecoms company, is being treated as junk and has become illiquid, despite the fact that it remains an investment grade credit following the latest downgrade by Moody's, the rating agency.

Moody's dropped KPN's unsecured rating to Baa3, one notch above junk status. However, it also said that KPN is on review for yet another downgrade - which would push it into high-yield territory - and the market has virtually stopped trading the credit.