labels: Standard & Poor's
Credits poised for downgrades reach new record: S&P news
02 April 2008

Mumbai: The number of entities at risk of downgrades reached a new record of 703 in March, though only three more than last month, according to an article published today by Standard & Poor's. The report, titled "Downgrade Potential Across Credit Grades And Sectors," says that credit fundamentals have been deteriorating in response to recessionary fears, along with a material slowdown in housing and consumer-related activity.

"The number of potential downgrades is 90 more than reported in the same period a year ago and is 68 more than the average recorded in 2007," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "The upsurge in the count of entities at risk of downgrades began in mid-summer 2007 with the onset of the credit market disruptions."

By sector, media and entertainment recorded the highest ratio of issuers with a negative bias relative to their total rated universe, followed by forest products and building materials, automotive, consumer products, and retail/restaurants, indicating their high vulnerability to deteriorating credit quality.

Vazza added, "Geographically, the US continues to top the list of potential bond downgrades, in part, because of greater credit volatility and because of a larger rated population. Of the total number of entities, about 66 per cent are based in the U.S. And 18 per cent in Europe."


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Credits poised for downgrades reach new record: S&P