Bangkok--7 Oct--Standard & Poor's
Consumer products, media and entertainment, and retail/restaurants remain the most negatively affected sectors amid the economic downturn, in light of falling consumer demand against a backdrop of economic and credit market turbulence, said an article published today by Standard & Poor's.
These sectors consistently have the highest levels of risk among our lists of distressed companies (defined as speculative-grade companies with securities trading in excess of 1,000 basis points above U.S. Treasuries), weakest links (companies rated 'B-' or lower with either a negative outlook or ratings on CreditWatch with negative implications), and potential bond downgrades (investment-grade or speculative-grade companies that have either a negative outlook or ratings on CreditWatch negative).
In the article, titled "Stress In Corporate America: Prospects For Consumer-Reliant Sectors Remain Dim (Premium)," Standard & Poor's Global Fixed Income Research uses these criteria to identify and spotlight U.S. sectors that have the highest levels of credit stress.
We identified 225 companies across the three sectors (consumer products, media and entertainment, and retail/restaurants) on the basis of the criteria described above. Of the 225 companies, 49 are on more than one list, indicative of even higher vulnerability. Eight companies are featured on all three lists.
"The trailing-12-month change in credit quality as of Aug. 31, 2009, shows that the media and entertainment sector has seen its average credit quality weaken by more than 131%, followed by retail/restaurants at 52% and consumer products at 43%," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research.
Over the past 12 months, 95% of all rating actions in the media and entertainment sector were downgrades, which is well more than the 89% among nonfinancials overall. The consumer products sector saw a downgrade ratio of 82.4%, while retail/restaurants comes in with downgrades accounting for 79.4% of all rating actions over the past 12 months.
This article is part of our premium Global Fixed Income Research content, which is available to premium subscribers to RatingsDirect, at www.ratingsdirect.com. 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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