FKI, a UK-based engineering group, reacted with disbelief on Tuesday after Moody's, the credit rating agency threatened to downgrade its debt to junk. The threat wiped more than 5% from the value of FKI and caused constenation in the debt markets.

John Biles, finance director at FKI, said: "We find it extremely difficult to understand why Moody's has taken this course of action, given that we reduced net debt by £76m to £422m in the six months to September 30.