Bangkok--20 Jul--Standard & Poor's
U.S. nonfinancial credit quality continued to improve in May and June, though economic conditions and market sentiment became less supportive, said an article published today by Standard & Poor's, titled "U.S. Nonfinancial Corporations' Risks And Opportunities: Testing The Market's Appetite For Low-Rated Debt."
In particular, the pace of the manufacturing expansion is beginning to slow, and we have seen some recent cracks in consumer confidence. "Despite our lower growth expectations for real GDP in the second half of the year, our outlook for nonfinancial credit quality has not changed drastically," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research.
"However, slow forecasted growth likely will weigh more heavily on issuers rated 'B-' and lower. Although speculative-grade credit quality has improved--with upgrades outpacing downgrades 1.7 to 1--sluggish revenue growth and weak credit metrics make speculative-grade issuers particularly sensitive to slower growth," said Ms. Vazza.
We believe that the majority of speculative-grade issuers will be able to refinance debt based on our view of economic and financial market conditions. However, companies rated 'B-' and lower, which typically have a combination of highly leveraged balance sheets, high business risk, and deteriorating operating performance, have a notable amount coming due over the next four years.
Financing conditions for these firms are more uncertain because they are more sensitive to changes in economic and market sentiment. Based on our estimates, approximately $235 billion in 'B-' and lower rated debt is coming due for U.S. nonfinancial issuers between 2011 and 2014.
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, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to
[email protected]. 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 Contacts:
Diane Vazza, New York (1) 212-438-2760
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