Bangkok--15 Oct--Standard & Poor's
While credit pressures have been mounting for nearly a year and a half, the credit market truly fell this past quarter, said a report published today by Standard & Poor's.
Globally, Standard & Poor's downgraded 227 issuers (with US$1.8 trillion/?1.3 trillion in rated debt), and 758 issuers are still poised for downgrades, according to the report, titled "Global Corporate And Sovereign Rating Actions: Third-Quarter 2008 (Premium)." Clearly, the current financial problems are global.
The U.S. and Europe have had the largest number of downgrades since the fourth quarter of 2002. The U.S., with 155 downgraded issuers last quarter, compares with an average of 99 issuers since the peak of 176 issuers in the fourth quarter of 2002. Similarly, Europe had 41 downgrades this quarter, whereas it has averaged about 25 per quarter since its 60-issuer peak in fourth-quarter 2002.
Other regions, including Other Developed (Australia, Canada, Japan, and New Zealand) and Asia/Pacific, saw a similar, although less severe, trend, with 16 and 13 downgrades, respectively. Despite several quarters of optimism resulting from strong financial performance on the part of Latin American banks, particularly in Brazil, even Latin America began to feel the global pinch this quarter, with four downgrades.
"A mix of negative factors, including high leverage, weak short-term debt-to-liquidity ratios, limited covenant headroom, and increased cash flow problems will inevitably put negative pressure on ratings, adding to already elevated default risk in the coming quarters," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group.
RatingsDirect is the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. The standard version of this article is part of our standard Global Fixed Income Research content. The premium version contains expanded analysis of the article's most significant points, typically broken out by sector and region. Also in the premium version are in-depth charts and tables, the underlying data of which are available for download. 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 Contacts:
Diane Vazza, New York (1) 212-438-2760