Bangkok--11 Jun--Standard & Poor's
In year-to-date 2007, 15 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$46.2 (Euro 34.2) billion, according to an article published today by Standard & Poor's. The report, titled "Global Potential Fallen Angels," states that this is an increase of four issuers from last month's report. In the same period last year, 15 issuers were downgraded to speculative grade with US$19.2 (Euro 14.2) billion in rated debt.
"Acquisition-related factors are playing a key role in the crossover of companies to speculative grade from investment grade," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "In the year to date, nearly three-quarters of fallen angels by number of issuers were associated with acquisition-related activity. Moreover, as of June 4, 53% 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."
The volume of debt affected by fallen angel activity increased substantially in 2007. The US$46.2 billion affected year-to-date debt is already 65.9% of the total US$70.1 (Euro 52) billion volume attributed to fallen angel downgrades in 2006. Globally, 38 entities are at risk of becoming fallen angels, with rated debt totaling US$58.1 (Euro 43) billion. This is the same as last month but four fewer than in June 2006.
Ms. Vazza added "rising stars in year-to-date 2007 exceed fallen angels by a margin of 10, though the debt affected by fallen angel activity is much larger. In 2006, fallen angels exceeded rising stars by a margin of 19. And, 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, and telecommunications."
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