Bangkok--27 May--Standard & Poor's
After hitting the astronomical high of 85% in December, Standard & Poor's distress ratio has been on a downward path since, reaching 46% as of May 15, said an article published today by Standard & Poor's.
While still elevated, the distress ratio is now nearly 24% lower than at the start of 2009, according to the article, titled "U.S. Distressed Debt Monitor: Distress Ratio Reaches Another Low In 2009 (Premium)." Coincident with the recent decline in the distress ratio, a similar pattern is observed among corporate bond spreads. The speculative-grade corporate bond spread was at 1,136 basis points (bps) on May 15, down from 1,370 bps a month earlier.
Standard & Poor's distress ratio is defined as the number of high-yield securities trading at spreads greater than 1,000 bps relative to Treasuries divided by the total number of rated speculative-grade issues.
"When looking at the distress ratio based on outstanding debt, the transportation, high technology, and utility sectors show levels far in excess of their traditional, issue-based distress measures," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "Among these, the greatest disparity between the two measures is within the transportation sector, which has a debt-based distress ratio of 85%--more than 15% higher than the standard issue-based distress ratio."
Among distressed bonds, the total number of companies with issues trading with spreads of 1,000 bps and higher is currently 338, down considerably from 406 in the past month.
Alongside a decrease in the distress ratio, the amount of affected debt fell to $232.8 billion from $270.3 billion in April.
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