Bangkok--26 Feb--Standard & Poor's
The speculative-grade corporate spread is now lower than at any point in 2009, closing at 674 basis points (bps) on Feb. 16. Along with this, the distress ratio is now solidly below its long-term average, at 12.7% as of Feb. 16. This is up from 10.4% in January, said an article published today by Standard & Poor's, titled "U.S. Distressed Debt Monitor: Distress Ratio Rises Slightly In February To More Than 12% (Premium)."
Standard & Poor's distress ratio is defined as the number of distressed securities divided by the total number of speculative-grade-rated issues. Distressed credits are speculative-grade-rated issues that have option-adjusted spreads of more than 1,000 bps relative to Treasuries.
"Among distressed bonds, the total number of companies with issues trading with spreads of 1,000 bps and higher is currently 114, up from 99 in January," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group.
"Within the distressed universe, recovery prospects remain low," said Ms. Vazza. "In February, 74.5% of all distressed issues fall into the lowest rating categories of '5' or '6', indicating only negligible to modest recovery in the event of default."
In addition, 74% of all distressed issues are either unsecured or subordinated notes. Holders of those notes have claims to a firm's assets that are secondary to more senior debtholders in the event of default.
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 by using the Ratings search box located in the left column at www.standardandpoors.com. 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 Contact:
Diane Vazza, New York (1) 212-438-2760