Bangkok--25 Nov--Standard & Poor's
Currently, 868 issuers are poised for downgrades, the highest level in three years and a surge of 82 issuers over the past month, said an article published today by Standard & Poor's.
By comparison, this month's count is more than double the number reported in November 2007 and nearly double the average for the past 39 months. Furthermore, the number of potential downgrades is more than double the count of those poised for upgrades, a trend that has progressed for roughly 15 months, according to the article, titled "Downgrade Potential Across Credit Grades And Sectors (Premium)."
Potential downgrades are defined as entities that have either a negative outlook or ratings on CreditWatch with negative implications across rating categories 'AAA' to 'B-'.
Despite materialized downgrades, the housing and financial sectors continue to show the highest downgrade risk, indicative of further prevalent rating actions if credit conditions continue to deteriorate.
Geographically, the U.S. continues to top the list of potential bond downgrades, with roughly one-quarter of current ratings showing downside risk.
The onset of a recession corroborates an increasing propensity for downgrades, characterized by a gradual pickup in negative bias.
"The increase in potential bond downgrades in the 2001 recession was accompanied by an expected decline in the number of those poised for upgrades," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "This trend is echoed today, but with a more prolonged, less steep curve, indicative of a slower progression into a new credit cycle."
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 Contact:
Diane Vazza, New York (1) 212-438-2760
Key Contacts:
Americas Media Relations: (1) 212-438-6667
media_ [email protected]
Americas Customer Service: (1) 212-438-7280
[email protected]