Bangkok--28 Jul--Standard & Poor's
The number of global weakest links continued to decline to 285 as of July 17, 2009, from 290 in June and a record high of 300 in April. The decline was largely attributable to the sharp rise in defaults, many of which were weakest links, said an article published today by Standard & Poor's.
"This is a trend that likely will continue for some time," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "Eroding credit quality leads to lower ratings and more entities with negative outlooks or with ratings on CreditWatch with negative implications as well as increased vulnerability to default."
The 285 weakest links have combined rated debt worth $397.8 billion. By sector, media and entertainment, forest products and building materials, and retail and restaurants were the most vulnerable, with the highest concentrations of weakest links, according to the article, titled "Global Bond Markets' Weakest Links And Monthly Default Rates (Premium)."
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.
Corporate defaults continue to rise rapidly in 2009, already surpassing the number in all of 2008. Through July 17, 2009, 179 issuers defaulted, affecting debt worth $424.44 billion. By comparison, 126 defaults were recorded in all of 2008, affecting debt worth $433 billion.
The 12-month-trailing global corporate speculative-grade bond default rate increased to 8.25% in June 2009 from 7.3% in May and is now more than 10x the 25-year low of 0.79% recorded in November 2007.
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:
David Wargin, New York (1) 212-438-1579, [email protected]
Analyst Contact:
Diane Vazza, New York (1) 212-438-2760