Bangkok--24 Jan--Standard & Poor's
As 2011 begins, the economic recovery is progressing at a slow but steady pace, and credit market indicators in the U.S. appear to be slowly improving as well, said an article published today by Standard & Poor's.
As a result, the speculative-grade corporate default rate fell to 3.27% at the end of 2010--its lowest point in just over two years. The speculative-grade corporate bond spread, which stood at 531 basis points (bps) as of Jan. 11, is now lower than at any time in 2010.
The distress ratio has also continued to decline, dropping to 6.1% as of Jan. 14 from 6.5% in December, according to the article, titled "The Distress Ratio Falls To 6.1%--Its Lowest Level In Three Years." 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 in December. The S&P/LSTA Leveraged Loan Index distress ratio dropped to 6.5% at the end of December from 7.7% in the previous month.
A total of 67 companies currently have issues trading with spreads of 1,000 bps and higher, roughly the same number from December (69). Additionally, the count of affected issues decreased to 89 as of Jan. 14 from 96 in December.
"With a decrease in the distress ratio, the amount of affected debt has also declined, falling to $34 billion from $36.3 billion in December," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "Based on debt volume, the media and entertainment, retail/restaurants, and oil and gas sectors accounted for 54.9% of the total debt outstanding."
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Media Contact:
Mimi Barker, New York (1) 212-438-5054,
[email protected]
Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760