Fallen angels number grows once more, S&P says

By Jennifer Chiou

New York, Oct. 9 - The number of fallen angels has continued its climb, Standard & Poor's said in a report titled "Global Potential Fallen Angel Report."

Through Oct. 6, the agency said 38 fallen angels were recorded on rated debt worth $56.91 billion, an increase of four from last month's report.

The September-released report noted 34 fallen angels linked to rated debt worth $39.6 billion.

S&P said 41 issuers throughout the world are at risk of becoming fallen angels, with rated debt totaling $77.6 billion, one fewer than the previous month and four fewer than in October 2005.

"Fallen angels have overtaken rising stars by a margin of 17 entities in the year to date, which is a reversal of the pattern seen in full years 2004 and 2005," Diane Vazza, managing director and head of S&P's global fixed-income research, said in the report.

The sectors most vulnerable to generating fallen angels by count are utilities, media and entertainment, insurance, telecommunications, consumer products, retail and restaurants, and heath care, according to the report.

Fallen angels are issuers that are downgraded to speculative grade from investment grade.

Based on rated debt volume, TXU Corp., a U.S. utility company, is the largest potential fallen angel with more than $15 billion of rated debt.

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