Investors in the US leveraged finance markets faced their worst year for almost a decade last year, according to US ratings agency Moody's Investor Services. The agency says that a record number of defaults, combined with lower-than-average recovery rates, cost investors in low-rated and unrated securities around $44.5bn (E45.3bn) during 1999, the worst year since 1991.

Tom Marshella, a managing director at Moody's, says the vast majority of losses can be traced back to US companies, despite perceptions that emerging market borrowers caught up in the Asian meltdown were chiefly to blame. Of the 147 companies which defaulted on obligations last year, 99, representing debt worth more than $23.5bn, were based in the US, he says.