Bangkok--25 Aug--Standard & Poor's
The number of global weakest links increased to 120 as of Aug. 17, 2011, from 109 as of July 20. The 120 weakest links have total rated debt worth $361.96 billion, said an article published today by Standard & Poor's Global Fixed Income Research, titled "Global Weakest Links And Default Rates: Weakest Links Increase As The Global Economy Slows."
Weakest links are issuers rated 'B-' and lower with negative outlooks or ratings on CreditWatch negative.
"So far in 2011 (through Aug. 17), only 23 issuers have defaulted--up by two since July--with combined outstanding debt worth $37.3 billion," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "The 12-month-trailing global corporate speculative-grade default rate decreased to 1.87% in July from 2.01% in June." Regionally, the U.S. speculative-grade corporate default rate declined to 2.1% in July from 2.25% in June. In Europe, the default rate declined slightly, to 0.90% from 0.92%, and the emerging markets default rate fell to 0.51% from 0.86%.
"Of the 120 weakest links worldwide, the U.S. accounts for 81, or 67.5% of the total," said Ms. Vazza. "Media and entertainment, banks, and forest products and building materials are the top three sectors by number of weakest links."
Recent U.S. economic data continue to point toward a slowing economy. We lowered our 2011 GDP growth forecast to 1.7%, and we expect the unemployment rate to remain elevated through 2012. In addition, in Europe, we continue to monitor the sovereign debt problems in some countries, as well as the weak economic data that have came out recently. Eurozone GDP grew a modest 0.2% in the second quarter, down from 0.8% in the first quarter. German GDP grew only 0.1% during the second quarter, increasing the uncertainty about Germany's ability to support the bailout of weaker eurozone countries.
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:
Jeff Sexton, New York (1) 212-438-3448,
[email protected]
Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760