Bangkok--5 Oct--Standard & Poor's
Standard & Poor's Global Fixed Income Research has published its most recent "Stress In Corporate America" report. In this report, we use three of our preexisting research publications--weakest links, potential bond downgrades, and the distressed report--to identify and spotlight U.S. sectors that we believe are currently subject to the highest levels of credit stress.
In light of sluggish consumer demand and uncertainty about economic and credit market conditions, the media and entertainment, oil and gas, and retail and restaurant sectors were the most troubled sectors as of Sept. 27, 2010, according to the article, titled Stress In Corporate America: Economy Pressures Media, Retail, And Oil And Gas Industries
These sectors consistently had the highest levels of risk among our lists of distressed companies, weakest links, and potential bond downgrades.
"We identified 87 companies in those three sectors that meet at least one of the criteria," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "Of the 87 companies, 18 are on more than one list, indicative of even higher vulnerability. Two companies are featured on all three lists."
Over the past 12 months, downgrades accounted for 53.2% of all rating actions in media and entertainment, 50% of rating actions in oil and gas, and 42.5% in retail and restaurants (despite recent drops in consumer spending and confidence levels). By comparison, 43.1% of rating actions on all U.S. nonfinancial issuers during this time period were downgrades.
Default rates--which are a lagging indicator--in these sectors have been falling, alongside the decline in the overall speculative-grade default rate in the U.S. "Overall," said Ms. Vazza, "we expect the number of speculative-grade defaults to decline this year."
The report is available to RatingsDirect subscribers on the Global Credit Portal at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to
[email protected]. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.
Media Contact:
Mimi Barker, New York (1) 212-438-5054,
[email protected]
Analyst Contact:
Diane Vazza, New York (1) 212-438-2760