Bangkok--5 Jan--Standard & Poor's
The exponential increases in the Standard & Poor's distress ratio continue, as the distress ratio hit an all-time high of 85% on Dec. 15, said an article published today by Standard & Poor's.
This is the highest level seen since the series began in October 2002 and is more than 74% higher than the level at the start of 2008, according to the article, titled "U.S. Distressed Debt Monitor: Distress Ratio Continues To Soar (Premium)." This increase runs alongside the continued rise in the speculative-grade spread, which hit 1,715 basis points (bps) on Dec. 16, up from 1,432 bps a month earlier.
"A rising distress ratio signals an increased need for capital, and it could be a precursor to more defaults if accompanied by a market disruption," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group.
"In line with an increasing distress ratio, the amount of affected debt jumped up to a record high of $398 billion in December from November's peak of $322 billion," said Ms. Vazza. Based on debt volume, the media and entertainment, oil and gas exploration and production, and telecommunications sectors together accounted for nearly 40% of the total debt.
Among distressed bonds, the total number of rated companies with issues trading with spreads of 1,000 bps and higher is currently 540, up from 488 the past month.
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:
David Wargin, New York (1) 212-438-1579, [email protected]
Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760