Bangkok--27 Apr--Standard & Poor's
Financial turbulence in 2009 triggered substantial ratings volatility in Europe, said an article published today by Standard & Poor's, titled "2009 Annual European Corporate Default Study And Rating Transitions." The downturn in the credit markets that began in late 2008 resulted in a sharp acceleration in default rates within the rated universe in Europe in 2009.
"From its starting level of 2.65% at the beginning of 2009, the speculative-grade default rate rose to its highest point in 6.5 years to 8.9% in November before declining to 7.98% by the end of the year," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group.
Ratings stability fell to an all-time low, with the percentage of unchanged ratings at 63.6%. The downgrade-to-upgrade ratio rose to a 16-year high of 6.0x.
The majority of the data we present in the study reference public and confidential issuer credit ratings on nonfinancial and financial companies and not credit estimates.
The deterioration was even more pronounced among credit estimates, which Standard & Poor's typically establishes on the basis of private information it receives from investors.
"In the study, we identified a clear negative correspondence between ratings and defaults in Europe," said Ms. Vazza. "The higher the issuer rating, the lower the observed frequency of default, and vice versa."
Companies with higher ratings took longer, on average, to default than did lower-rated companies. And stability rates were higher for companies with investment-grade ratings ('BBB-' and higher) than they were for companies with speculative-grade ratings ('BB+' and lower).
The report is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, the article will also be available on Standard & Poor's public Web site at www.standardandpoors.com/gfir. 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 Contacts:
Diane Vazza, New York (1) 212-438-2760
Key Contacts:
Americas Media Relations: (1) 212-438-6667
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Americas Customer Service: (1) 212-438-7280
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