Bangkok--9 Aug--Standard & Poor's
For the first time since March, downgrades outpaced upgrades in the U.S. high-yield segment in July. This marked a second blip in the general trend of upgrades outpacing downgrades in this segment since they were equalized in November 2009, according to an article published today by Standard & Poor's Global Fixed Income Research, titled "U.S. High-Yield Credit Metrics Take A Dip In July (Premium)."
Last month's downgrade ratio, at 53%, is 6% higher than the 12-month trailing average and 12% higher than the average since November 2009. "While this may not be indicative of a directional shift in credit quality," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research, "we believe it is illustrative of the lingering uncertainty of the credit markets and the broader economy as key issues--including a lack of improvement in employment, inconsistent financial regulation across the globe, and inadequate government stimulus due to rising deficits--continue to concern investors."
These issues have had an adverse effect on U.S. high-yield issuance as well. Last month, U.S. high-yield issuance ticked up to 21 issues with proceeds worth $112 billion, from the meager 15 issues worth $5 billion in both May and June, but it is nevertheless a third less than the 12-month trailing average of 34 issues with an average of $415 billion in proceeds. The majority of these issues were senior notes, rated at the 'B' rating category, and had an average coupon of 9%. The remaining six of the issues were in senior notes in the 'BB' rating category with an average coupon of 7.8%. No deals were completed at the 'CCC' and below levels last month.
This article is part of our premium Global Fixed Income Research content, which is available to premium subscribers to RatingsDirect on the Global Credit Portal at www.globalcreditportal.com and to RatingsDirect at www.ratingsdirect.com. 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