Bangkok--2 Sep--Standard & Poor's
The count of issuers poised for downgrades declined slightly to 955 from 965, largely as a result of materialized downgrades, said an article published August 31 by Standard & Poor's.
This reduction comes after record highs were reached in nearly every month since January 2008. The tally is 208 issuers more than the levels seen a year ago and 22 more than the trailing-12-month average of potential downgrades, according to the article, titled "Downgrade Potential Across Credit Grades And Sectors (Premium)."
Further, the global ratio of potential downgrades to potential upgrades at the end of second-quarter 2009 remained at 7 to 1, the same level at the end of the first quarter but more than three times the ratio at the end of second-quarter 2008.
Potential downgrades are defined as entities that have either a negative outlook or ratings on CreditWatch with negative implications across rating categories 'AAA' to 'B-'.
Despite materialized downgrades throughout the sectors, banks displayed the highest downgrade propensity, closely followed by media and entertainment, insurance, consumer products, and transportation.
"Timely and ongoing surveillance of issuers at risk of downgrades can provide value to investors in their sectoral credit-allocation process as well as in hedging against potential capital losses arising from a downgrade," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "Indeed, in many of the sectors facing potential downgrades, the proportion of issuers listed with a negative bias is currently at a more elevated level than ever recorded in this credit cycle, highlighting the risks to credit quality."
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.
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