Bangkok--30 Nov--Standard & Poor's
After getting off to a healthy start in 2010, the economic recovery is now progressing slowly. According to an article published today by Standard & Poor's, titled "U.S. Distressed Debt Monitor (Premium"), credit market indicators in the U.S. appear to be mixed, though most are improving.
"As a result, the speculative-grade corporate spread has leveled off and remains consistent with a recession," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "After hitting a low of 537 basis points (bps) on April 26, the speculative-grade corporate bond spread widened to 568 bps as of Nov. 15. Along with this, the distress ratio fell back under 10%, dropping to 8.4% as of Nov. 15 from 10.6% in October."
Standard & Poor's distress ratio is defined as the number of distressed securities divided by the total number of speculative-grade-rated issues. Distressed credits are speculative-grade-rated issues that have option-adjusted spreads of more than 1,000 bps relative to Treasuries.
Both the corporate and leveraged loan distress ratios fell slightly in October. The S&P/LSTA Leveraged Loan Index distress ratio dropped to 7.9% at the end of October from 9.1% in the previous month.
Among distressed bonds, the total number of companies with issues trading with spreads of 1,000 bps and higher is currently 85. This is a marked drop-off from the 104 seen in October. Additionally, the count of affected issues decreased to 121 as of Nov. 15 from 150 in September. Within the distressed universe, recovery prospects remain weak.
The standard version of this article is part of our standard Global Fixed Income Research content. The premium version contains expanded analysis of the article's most significant points, typically broken out by sector and region. Also in the premium version are in-depth charts and tables, the underlying data of which are available for download. 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