Bangkok--12 Oct--Standard & Poor's
Standard & Poor's Ratings Services has just published a commentary that says it evaluated the prospects for 1,060 issuers (of 1,208 U.S. high-yield parent level issuers) with rated debt at the end of September 2006.
A study of CreditWatch and outlook status identifies 123 issuers as potential upgrade candidates, with 12 issuers—primarily in the utility and insurance sectors—seen as potential rising star candidates. "Although 55% of issuers present a stable profile, a substantial 31% are seen as subject to downgrade risks, with 2% showing developing risks," noted Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group.
The article, titled "U.S. High-Yield Prospects" goes on to say that while firms in the media and entertainment industry, along with consumer products, health care and high technology, are susceptible to the highest downgrade risks, these same large industries (with the exception of health care) also contain the most potential bond upgrade candidates. A more cautionary stance for high-yield investors at this stage of the credit cycle is viewed as important, since the growth slowdown underway is likely to dent profits growth and trip credit quality in the process. Thus, we advocate a short duration posture, coupled with moving up the high-yield quality ladder, since the gains from taking on more risk do not exist.
The report is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com . If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to [email protected] . The report is also available at www.sandp.com/gfir , listed under Global Fixed Income Research. If you have not previously registered with the site, you will need to do so to access this material. Registration requires minimal information and is free. Members of the media may request a copy of this report by contacting the media representative name provided.
Media Contact:
Marc Eiger, New York (212) 438-1280, [email protected]
Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760
Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data. With approximately 7,500 employees, including wholly owned affiliates, located in 21 countries. Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com .
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