Bangkok--8 Mar--Standard & Poor's
In 2007 year to date, five fallen angels—issuers that were downgraded to speculative grade ('BB+' and lower) from investment grade ('BBB-' and higher)—were recorded, affecting rated debt worth US$24.5 (?18.7) billion, according to a report published by Standard & Poor's today. The article, which is titled "Global Potential Fallen Angels," reports that this is an increase of two issuers from last month's report, both of which were U.S.-based companies.
"The sectors most vulnerable to generating fallen angels by number of issuers are utilities, telecommunications, high technology, media and entertainment, health care, and consumer products," noted Diane Vazza head of Standard & Poor's Global Fixed Income Research Group. "By debt volume, the lineup is utilities, telecommunications, homebuilders/real estate companies, and media and entertainment."
Both the reported fallen angels this month, TXU Corp. and Phelps Dodge Corp., were downgraded as a result of acquisitions. In the full-year 2006, acquisition-related activity accounted for 30% of fallen angels by number of issuers and 60% by debt volume. Globally, 39 entities are at risk of becoming fallen angels, with rated debt totaling US$61.9 (?47.3) billion. This is two less than last month and five fewer than in March 2006.
Ms. Vazza added "that rising stars in year-to-date 2007 exceed fallen angels by a margin of six entities, though the debt affected by fallen angel activity is much larger. In 2006, the balance of crossover activity had flipped, with fallen angels exceeding rising stars by a margin of 19 entities."
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