identifies weakest-rated global issuers
11 June 2002
& Poors (S&P) has identified 47 of the weakest-rated
global issuers, representing US$19 billion in rated bonds.
This is a decrease of two issuers and US$5 billion in rated
bonds from two months ago.
May 2002, the rolling 12-month US speculative-grade default
rate fell to 9.57 per cent from 10.26 per cent the previous
month. Over the same period, the European Union speculative-grade
default rate fell to 10.95 per cent from 11.68 per cent.
In contrast, the US and European Union investment-grade
default rates remained constant at 0.1 per cent and 0.0
per cent respectively.
weakest-rated issuers have S&Ps credit rating designations
of triple-C or lower and are either on CreditWatch with
negative implications or have a negative outlook. While
the current list of 47 weakest-rated global issuers is
long, it remains below the 59 and 49 identified this past
January and April, respectively.
decrease in the number of weakest links supports the declining
default rates and serves as an indicator that a moderate
deceleration in defaults will continue throughout the
rest of 2002," says Diane Vazza, head, S&P, Global
Fixed Income Research.
concentration of issuer weakness exists in the media and
entertainment and telecommunications sectors, together
representing 40 per cent of the weakest issuer list. These
top two areas of weakness maintained their relative position
on the list while automotive and high technology tied
for third place, each representing an additional 9 per
cent of the list. The country distribution is predominantly
in the US, accounting for 74 per cent of issuers.
S&P last commented on Weakest Links on 10 April
2002, 19 issuers have fallen off these lists and 17 issuers
have been added.Of the 19 that were removed from the list,
13 were due to issuers defaulting, four had rating improvements
either in issuer credit rating, outlook, or CreditWatch
implication, one had its ratings withdrawn, and one was
acquired, loosing its parent issuer status. The 17 new
members were the result of downgrades in issuer credit
rating, outlook, or CreditWatch implication during this