Bangkok--28 May--Standard & Poor's
The number of entities at risk of downgrades inched down to 620 in mid-May 2007, seven less than reported in April but 27 fewer than the average of the past 12 months, according to a report published yesterday by Standard & Poor's. The report, titled "Downgrade Potential Across Credit Grades And Sectors," states that of the total number of entities, 69% are based in the U.S. and 15% in Europe.
"The automotive, media and entertainment, consumer products, health care, and telecommunications sectors have the highest ratios of issuers with a negative bias relative to their respective total rated universes, indicating that these sectors are potentially most vulnerable to credit-quality deterioration," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "The sectors poised for downgrades have been relatively consistent, with automotive, consumer products, and media and entertainment appearing consistently in our monthly potential downgrade reports since the beginning of the year."
Many of the entities at risk of downgrades are in the consumer discretionary domain, where momentum is expected to decelerate. Examples of this domain include the aforementioned sectors along with retail/restaurants and high technology. These sectors will feel increased pressure as a result of greater consumer indebtedness, growing downward momentum about the housing outlook, and high energy prices. Of the 620 companies at risk for downgrades globally, 63% have speculative-grade ratings, with those rated 'B+' most vulnerable to downgrades at 102 companies (16% of the total). U.S.-based issuers comprised 81% of the total speculative-grade issuer base.
Ms. Vazza added "downgrade pressure is felt predominantly among nonfinancials, which accounted for 94% of the total issuers."
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