Bangkok--17 Dec--Standard & Poor's
U.S. high-yield corporate issuers showed mostly positive, though mixed, signals last month, according a report published today Standard & Poor's Global Fixed Income Research, titled "U.S. High-Yield Credit Metrics Show Mostly Positive, Though Mixed, Signals (Premium)." More U.S. high-yield corporate issuers were downgraded on a monthly basis than in any other month so far in 2010, with November's 20 downgrades doubling October's tally. The U.S. speculative-grade health care segment saw the most downgrades last month with six, followed by media and entertainment with four, and forest products and building materials with three.
Unlike March and July, however, November's upgrades still managed to tip the scale at 22, yielding a downgrade ratio of 48%. The default rate remained largely flat last month at 3.4%, declining just a tenth of a percentage point from its level in October. This marks the first time the default rate has not noticeably declined this year since it peaked at over 11% at this time last year.
"Our baseline projection for the U.S. corporate speculative-grade default rate in the 12 months ending in September 2011 is 2.4%," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "The mean baseline projection would be realized if a total of 35 speculative-grade-rated issuers were to default from October 2010 to September 2011."
Spreads narrowed across all speculative-grade rating levels last month, averaging a 22 basis point (bp) decline in the 'BB' category to 429 bps, a 35 bp decline in the 'B' category, and a 65 bp decline in the 'CCC' category.
The amount of speculative-grade debt maturing in 2011 totals $122 billion. "We consider this to be relatively modest and expect the market to cater to investors with greater risk appetite, unless there is any unexpected worsening in financial conditions," said Ms. Vazza. The total amount of maturing speculative-grade debt increases markedly in the following years, to $165 billion in 2012, $221 billion in 2013, and $338 billion in 2014.
This article is part of our premium Global Fixed Income Research content, which is available to premium subscribers to RatingsDirect on the Global Credit Portal at www.globalcreditportal.com and to RatingsDirect at www.ratingsdirect.com. 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,
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Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760