Bangkok--16 May--Standard & Poor's
Acquisition-related factors are playing a key role in the crossover of companies to speculative grade from investment grade, according to an article published today by Standard & Poor's.
The report, titled "Global Potential Fallen Angels," states in the year-to-date, nearly three-quarters of fallen angels by number of issuers were associated with acquisition-related activity. Moreover, as of May 11, 50% of the companies identified as most likely to cross over the speculative-grade threshold were affected by risks stemming from acquisition-related (including LBO) activity.
"Rising stars in 2007 exceed fallen angels by a margin of eight entities, though the debt affected by fallen-angel activity is much larger. In 2006, fallen angels exceeded rising stars by a margin of 19 entities," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "The sectors most vulnerable to generating fallen angels by number of issuers are utilities, health care, and media and entertainment. By debt volume, the lineup is utilities, media and entertainment, telecommunications, and health care."
In year-to-date 2007, 11 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$34.2 (?25.1) billion. This is an increase of three issuers from last month's report. In the same period last year, 10 issuers were downgraded to speculative grade with US$12.6 (?9.4) billion in rated debt. The volume of debt affected by fallen angel activity increased substantially in 2007. The US$34.2 billion affected year-to-date debt is already 48.7% of the total US$70.1 (?53.9) billion volume attributed to fallen angel downgrades in 2006.
Ms. Vazza added "as a new feature of our analysis, business risk and financial risk scores are listed for 26 nonfinancial entities, based on the latest available issuer rankings published by Standard & Poor's Ratings Services. Of the 26, the majority, 19, are listed with satisfactory business risk and intermediate financial risk."
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] . Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com ; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Members of the media may request a copy of this report by contacting the media representative provided.
Media Contact:
Mimi Barker, New York (1) 212-438-5054
Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760
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