The global bond markets may be at a pivotal period, but their credit quality continues to hang tough.
In the first eight months-plus of this year, the number of rising stars has exceeded that of fallen angels, maintaining the trend set in 2004, according to Diane Vazza, head of Standard & Poor’s Global Fixed Income Group, in a new report.
Vazza noted that so far this year, 45 rising stars — companies whose debt has been upgraded from junk status to investment grade — have been recorded worldwide so far this year; the upgrades affect rated debt worth $95.2 billion. For the same period in 2004, S&P reported only 31 rising stars.
Through September, Standard & Poor’s also counted 28 fallen angels — companies whose debt has been downgraded from investment grade to junk. The ratings agency pointed out that the volume of debt affected by the downgrades — $501.7 billion — has “vastly outpaced” the equivalent affected by upgrades, though much of this volume is attributable to the downgrades of General Motors Corp. and Ford Motor Co.
Worldwide, S&P singled out 30 companies as candidates to become rising stars, three fewer than the number cited in August. The 30 companies account for $62.1 billion in rated debt, added the ratings agency. Sectors displaying the highest numbers of potential rising stars included high technology, telecommunications, capital goods, media and entertainment, and retail/restaurants, according to S&P.