Bangkok--19 May--Standard & Poor's
The number of global weakest links decreased marginally to 293 as of May 13, 2009, from a record high of 300 in April, said an article published today by Standard & Poor's.
The decline was largely attributable to the sharp increase in defaults, many of which were weakest links. This is a trend that likely will continue for some time, according to the article, titled "Global Bond Markets' Weakest Links And Monthly Default Rates (Premium)."
The 293 weakest links have combined rated debt worth $468.98 billion. By sector, media and entertainment, forest products and building materials, and retail/restaurants were the most vulnerable, with the highest concentrations of weakest links. (Weakest links are defined as issuers rated 'B-' or lower with either a negative outlook or with ratings on CreditWatch with negative implications, and they are at greater risk of default.)
"In the U.S., it's not surprising that the real estate and forest and building products/homebuilders sectors have some of the highest default rates, given the current stress that the housing industry is experiencing," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "In addition, consumer discretionary sectors are particularly vulnerable to cyclical downtrends in the economy, including leisure/media, consumer/service, and transportation to some extent."
Corporate defaults continue to rise rapidly in 2009, nearly matching the number in all of 2008. Through May 13, 2009, 121 issuers defaulted, affecting debt worth $297.22 billion. By comparison, 126 defaults were recorded in all of 2008, affecting debt worth $433 billion. Of the 121 defaults in 2009, 85 are from the U.S., 21 are from emerging markets, seven are from Europe, six are from Canada, and one each is from Australia and Japan. The U.S. also leads in the number of weakest links, with 215 of the 293 entities, or 73%.
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 Ratings in the left navigation bar, select Find a Rating. 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