Bangkok--28 Apr--Standard & Poor's
Since the beginning of the financial crisis, 17 companies made a round-trip from investment grade to speculative grade and back again within just a few years, said an article published today by Standard & Poor's Global Fixed Income Research, titled "How Some Fallen Angels Of The Credit Crisis Became Rising Stars Of The Recovery."
"During the credit crisis, from mid-2007 through 2009, Standard & Poor's Ratings Services downgraded 155 issuers to speculative grade from investment grade. Of these 155 fallen angels, 17, or 11%, subsequently became rising stars," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "These 17 round-trippers were upgraded back to investment-grade status, while another 19, or 12%, continued their trip down the rating scale to an eventual default."
Fallen angels are companies downgraded to speculative grade from investment grade, and rising stars are companies upgraded to investment grade from speculative grade. Market participants consider issuers investment grade if they're rated 'BBB-' and higher, and speculative-grade if they're rated 'BB+' and lower.
The financial institutions and high technology sectors account for nearly half of the total, and they're the only sectors with more than one issuer that returned to investment grade from speculative grade.
"Improved credit measures were the most commonly cited reason for these fallen angels becoming rising stars," said Ms. Vazza. "Strategic options such as mergers or divestitures were the second-most commonly cited reason for an upgrade, though they were often limited during the financial crisis because of a lack of liquidity."
The average amount of time between downgrade to speculative grade and upgrade to investment grade for these 17 issuers was 1.5 years. Financial companies made their round-trips faster than nonfinancial issuers, largely because the financial sector was quick to rebound following the crisis.
The report is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.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 Contacts:
Diane Vazza, New York (1) 212-438-2760