Bangkok--26 Apr--Standard & Poor's
After events in the Middle East and Japan resulted in investor pessimism and risk aversion in March, markets now appear to be on a stronger footing, said an article published today by Standard & Poor's, titled "U.S. Distressed Debt Monitor (Premium)." Default activity in the U.S. continues to decrease, with the speculative-grade corporate default rate coming in at 2.46% at the end of March.
"The U.S. speculative-grade corporate bond spread returned to its declining trend from the beginning of the year, coming in at 475 bps on April 15, down from 507 bps a month earlier," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "With the decrease in the corporate bond spread, the distress ratio also fell, to 3.56% on April 15, versus 5.24% a month earlier."
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.
A total of 48 companies currently have issues trading with spreads of 1,000 bps and higher--down from 58 in March. Along with this, the count of affected issues decreased to 55 as of April 15 from 79 in March.
With a decrease in the distress ratio, the amount of affected debt also has receded, to $15.9 billion as of April 15 from $32.9 billion in March. Based on debt volume, the media and entertainment, retail/restaurants, and oil and gas sectors accounted for 58.2% of the total debt outstanding. Oil and gas alone accounted for more than 25.2%.
This article is part of our premium Global Fixed Income Research content, which is available to premium subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.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,
[email protected]
Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760