Bangkok--8 Oct--Standard & Poor's
Corporate credit risk continued to stabilize in September, according to a report published today by Standard & Poor's Global Fixed Income Research. U.S. nonfinancial corporate upgrades outpaced downgrades almost 2 to 1, while the proportion of companies with negative outlooks or on CreditWatch negative continued to fall. The primary market for investment-grade bonds and both speculative-grade bonds and loans flourished in September, with total dollar volume from both financial and nonfinancial issuers near $140 billion. Despite the heavy supply, bond and loan spreads in the secondary market tightened during the month.
"The strong investor demand for corporate bonds and loans has given issuers a bit more power to demand better terms," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "Companies have pushed for slightly looser covenants on term loans, and high demand for investment-grade bonds has pushed new-issue concessions down to prerecession levels. And there has been a ramp up of debt issuance to fund dividends and share buybacks."
According to the report, titled "U.S. Corporate Credit Fires On All Cylinders," the increased ease of issuance on the part of nonfinancial corporates is a positive sign for corporate debt markets. However, the swing towards issuer-friendly deals raises concern, especially if the pendulum continues to swing further in that direction.
"Assuming the recent market sentiment stands firm, it is possible that we will see a rise in risky deals," said Ms. Vazza.
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