Bangkok--28 Apr--Standard & Poor's
(Editor's note: The original version of this article, which was published yesterday, contained an incorrect headline. This headline in this version has been corrected.)
As the latest recession appears to be coming to a close, credit conditions in 2010 have become more favorable for all lenders, including those most at risk, according to an article published yesterday by Standard & Poor's. The article, which is titled "U.S. Distressed Debt Monitor: Distress Ratio Down To 6.7% In April (Premium)," says that the speculative-grade corporate spread is now lower than at any point since the start of 2008, closing at 552 basis points (bps) on April 15. Along with this, the distress ratio is at 6.7% as of April 15, down from 9.7% in March.
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.
The high technology, media and entertainment, and transportation sectors are posting the highest debt-based distress ratios at 16.9%, 13.8%, and 7.5%, respectively. "The debt-based distress ratio for high technology is considerably higher than its traditional, issue-based measure, revealing that a disproportionate amount of speculative-grade debt in this sector is attributable to distressed companies," noted Diane Vazza, head of Standard & Poor's Global Fixed Income Research group. "Two debt issues from First Data Corp., which total $5.75 billion, are responsible for a majority of the distressed issues in the high-tech sector this month."
Among distressed bonds, the total number of companies with issues trading with spreads of 1,000 bps and higher is currently 70. This is down from 89 in March and is the lowest level since December 2007.
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,
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Analyst Contact:
Diane Vazza, New York (1) 212-438-2760