Bangkok--28 Jul--Standard & Poor's
After falling for most of 2009, Standard & Poor's distress ratio has remained fairly steady since June, reaching 36% as of July 15 from 34% the previous month, said an article published today by Standard & Poor's.
This is still more than double the long-term average of 16% and high enough to keep the 12-month moving average at 52.5%, signaling a protracted period of difficult lending conditions for the weakest speculative-grade-rated issuers, according to the article, titled "U.S. Distressed Debt Monitor: Distress Ratio Holds Steady Into The Summer (Premium)."
This leveling off of distress is coincident with movement in corporate bond spreads. The speculative-grade corporate bond spread was at 969 basis points (bps) on July 15, up from 946 bps a month earlier.
"Among distressed bonds, the total number of companies with issues trading with spreads of 1,000 bps and higher is currently 278, a slight increase from 268 in the past month," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group.
"With a slight increase in the distress ratio, the amount of affected debt also rose--to $195.3 billion from $177 billion in June."
Based on debt volume, the finance companies, media and entertainment, and high technology sectors together accounted for 57% of the total debt outstanding.
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Media Contact:
David Wargin, New York (1) 212-438-1579, [email protected]
Analyst Contact:
Diane Vazza, New York (1) 212-438-2760