Bangkok--24 May--Standard & Poor's
In May, the U.S. distress ratio nudged higher to 0.9% from 0.8% in April, and it has remained below 1% for three straight months according to a report published on May 22, 2007 by Standard & Poor's. The report, titled "U.S. Distressed Debt Monitor," stated that the 12-month moving average, however, hit an all-time low at 2.01% this month down from 2.2% in April. A year ago, the distress ratio and its moving average registered 3.7% and 5.6%, respectively.
"Low distress levels are mirrored in the U.S. leveraged-loan market, in which the share of performing loans trading at prices less than 80 cents on the dollar has been recording near zero rates since December 2005," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "In the U.S., the health care, capital goods, and consumer products sectors displayed the highest propensity for distress as a share of total speculative-grade rated issues. The aerospace and defense sector ranked on top, but this sector's high ranking should be qualified because the underlying sample size of speculative-grade issues is small."
A total of 46 rated companies had issues trading at distressed levels at the various thresholds, down from 52 on last month's list, and markedly lower than 97 companies listed in December 2006. Of the total, 57% had either negative outlooks or ratings on CreditWatch with negative implications, 25% had stable outlooks, 6% were positive, and 8% developing. Of the 13 companies listed at the 1,000 bps level, eight were rated 'CCC+' or lower, and all but two were on CreditWatch with negative implications.
Ms. Vazza added "as of May 15, distressed issues across eight sectors cumulatively affected debt worth $2.4 billion, higher than the $1.9 billion reported last month. Based on debt volume, capital goods comprised the largest portion of the total, accounting for more than 24% this month."
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