Bangkok--7 Nov--Standard & Poor's
The European corporate rated universe (nonfinancial and financial) has seen significant change in the last two decades, according to an article published on Nov. 3, 2006, by Standard & Poor's Ratings Services. The article, which is titled "European Ratings Distribution: Two Decades Of Visible Change," says that against a backdrop of capital-market deepening, the advent of new investors, increases in risk appetite, and reduced (albeit still high) bank intermediation, the ratings mix has undergone a visible transformation during this period.
"Corporate Europe still remains predominantly investment grade," noted Diane Vazza, head of Standard & Poor's Global Fixed Income Research. However, the ratings mix is increasingly clustered around the 'A' rating category in recent years, down from 'AA' 15 years ago.
At 19%, the proportion of companies rated speculative grade is still much lower in Europe than the comparable ratio of 49% in the U.S. (including parents and subsidiaries).
The median rating in the European financial segment has been relatively static, with no major movement observed since 2003 when the insurance market suffered significant investment-related losses. By contrast, the median rating among European nonfinancials has been considerably more dynamic. In spite of pronounced growth in high-yield ratings beginning in the late 1990s, the median rating among European nonfinancials remains investment grade, whereas its U.S. counterpart is already speculative grade.
"Deteriorating credit quality in the speculative-grade segment remains a concern," Ms. Vazza added. "The share of 'B' rated issuers has reached an 11-year high of 52%, an early signal of potential default pressures ahead." This compares with 41% in 2005, 36% in 2004, and 30% in 2003.
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:
Mimi Barker, New York (1) 212-438-5054, [email protected]
Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760