Shockwaves from the rating downgrades of US carmakers Ford and General Motors have all but shut the corporate debt markets and are threatening to engulf the M&A and private equity sectors.

After a blistering start to the year that fuelled market participants' hopes of another record period for high yield, new issuance has dried up overnight. There have been no new high-yield bonds on either side of the Atlantic since Ford and GM were cut to junk status by Standard & Poor's just over two weeks ago.