Bangkok--23 May--Standard & Poor's
Standard & Poor's Ratings Services rated 1,120 entities in Europe at the end of the first quarter of 2007, according to an article published on May 18, 2007. The article, which is titled "European Ratings Distribution: Nonfinancials Key To Credit Quality," says that of the 1,120, 81% were rated investment grade ('BBB-' or higher).
This total consisted of 522 financial entities and 598 nonfinancial entities. First-time issuer credit ratings were assigned to 29 companies across both investment-grade and speculative-grade categories in the three months ended March 2007. If this pace were to be maintained for the remainder of the year, a total of 116 newly rated companies would materialize in 2007, higher than the 97 recorded in 2006 but lower than the pace of the prior two years. Ratings transitions, which are also a key driver of shifts in ratings distributions, remained largely stable in the first quarter, with 92% of ratings remaining unchanged at the end of March.
"There has been significant change in the European corporate-rated universe in the last two decades," noted Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. (This includes both financial and nonfinancial entities.) "Against a backdrop of capital-market deepening, increases in risk appetite, and reduced bank intermediation, the ratings mix has undergone a visible transformation," Ms. Vazza added. "During this time, the prominence of 'AAA' rated entities has declined significantly in both the U.S. and Europe. Continuing changes in corporate risk orientation and compressed financial tradeoffs indicate that this trend is not likely to reverse."
Corporate Europe remains predominantly investment grade, but the share of speculative-grade ratings among financial and nonfinancial entities has increased dramatically in the last 15 years, to 19% at the end of the first quarter of 2007 from just below 2% in 1990 and 8% in 1997. Although the long-term trend observed in the U.S. is similar, the current proportion of entities rated speculative grade in that region is significantly higher, at nearly 50% at the first quarter of 2007.
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, [email protected]
Analyst Contact:
Diane Vazza, New York (1) 212-438-2760
Felicity Albert, London (44) 20-7176-3501