Credit

Debt’s “Fallen Angels” on the Rise

S&P tally of companies with ratings problems tags 44 as potentially in that category, more than in 2006 or 2007. Finance companies and homebuilders...
Roy HarrisFebruary 19, 2008

The 44 companies that Standard & Poor’s rates as global “potential fallen angels” for their BBB- debt ratings, with either a negative outlook or a negative CreditWatch listing, now represent the highest total in two years, according to an S&P report.

As it reported last month, debt totaling $131.3 billion is listed by these junk-debt issuers. They continue to be led by homebuilders and real estate companies, utilities, and forest products concerns, S&P calculates. The ratings service’s article on the subject, “Global Potential Fallen Angels,” says that last year’s fallen-angel total was 39 companies, with 43 qualifying for the dubious distinction in 2006.

If there’s any good news in the report, it’s that only one company — Norbord Inc., a Canadian forest products concern, with rated debt worth $637 million — has made the list since 2008 began. At the same period of 2007, three fallen angels had been recorded.

By debt volume, the “leader” among these companies with poor debt ratings is the finance-company sector, followed by telecommunications, utilities, homebuilding and real estate, forest products and building materials, and the media and entertainment sectors.