Bangkok--13 Jul--Standard & Poor's
Several key trends have emerged in the speculative-grade market in 2011. Issuance has surged, spreads have increased since April (though they're still at pre-crisis levels), and refunding needs are high but appear manageable, said an article published today by Standard & Poor's Global Fixed Income Research, titled "U.S. Speculative-Grade Market Midyear 2011 Overview."
"In addition, upgrades have outpaced downgrades, though positive and negative biases now imply more balanced upgrade and downgrade activity," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. Standard & Poor's expects the U.S. speculative-grade default rate to decline to 1.6% through March 2012.
"Speculative-grade issuance is nearing levels last seen before the recession, which began at the end of 2007. Issuance levels sharply declined in 2008 and 2009, but they've increased year over year in both 2010 and 2011," said Ms. Vazza. "By rating, we've seen issuance levels rising at the lower end of the rating scale over the past three years."
In the U.S., rating actions among speculative-grade issuers have been generally favorable. Upgrades have outpaced downgrades in 2010 and in 2011 (through June 6). By sector, downgrades exceed upgrades only in consumer products and retail/restaurants in 2011. By rating, the highest number of upgrades has occurred in the 'B' rating category.
The negative bias for U.S. speculative-grade issuers is at 14%, well below its long-term average of 29% since 1995. Positive bias is 12%, slightly below its long-term average of 14%. In addition, the negative bias levels in all sectors are lower than their long-term averages.
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Media Contact:
Mimi Barker, New York (1) 212-438-5054,
[email protected]
Analyst Contact:
Diane Vazza, New York (1) 212-438-2760