Potential “Fallen Angel” Bond Issuers Reach 18-year High
Globally, an 18-year record high of 75 entities are listed by Standard & Poor’s as potential fallen angels, defined as entities rated ‘BBB-’ with either a negative outlook or with ratings on CreditWatch with negative implications.
By comparison, 2008 averaged 47 potential fallen angels each month. This number has increased steadily since the second quarter of 2007, a trend likely to continue as recessionary economic and credit conditions worsen to their eventual trough, S&P says.
By debt volume, the line-up among potential fallen angels is led by finance companies, followed by the forest products and building materials and retail and restaurants sectors.
Based on rated debt volume, U.S.-based American General Finance Corp., with $15.95 (€12.27) billion in rated debt, tops S&P’s list as the largest fallen angel so far this year. French building materials company Lafarge S.A. is the largest potential fallen angel, with $14.76 (€11.36) billion in rated debt.
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