One in 13 issuers on downgrade review, but most are in utilities, telecoms, finance, Moody's says

New York, Oct. 23 - Nearly one in 13 corporate issuers worldwide are on review for downgrade but most of the companies affected are in just three sectors, utilities, telecommunications and financial institutions, according to Moody's Investors Service.

Utilities and telecommunications account for 40% of issuers on downgrade review while financial institutions - including banks, thrifts, finance and securities firms, real estate investment trusts and insurance companies - make up another nearly 25%.

"The current trend of credit deterioration is likely to continue for the foreseeable future as indicated by our Watchlist statistics," says Richard Cantor, managing director of Moody's ratings research & analysis, "although they also clearly reveal that some industries are under far more strain than others."

Moody's said it has downgraded one in nine utilities over the past three months and one in five is currently under review for downgrade.

Almost one in three telecommunications companies is on review for downgrade.

The rating agency noted that historically approximately two-thirds of all reviews have been ultimately resolved in the direction in which they are initiated.

Moody's also said airlines have been under tremendous credit pressure, with most carriers downgraded since Sept. 11, 2001 - many more than once - and one in five still under review for possible further downgrade.

Banking has suffered a reversal of fortune, Moody's continued. From September 2001 to September 2002, upgrades outnumbered downgrades in the sector 2 to 1. But over the past three months, downgrades have exceeded upgrades in the sector by that same ratio, and downgrade reviews now exceed wathchlists for upgrade by 6 to 1. But Moody's added that all the recent downgrades involve non-U.S. banks as do "all but a few" of the current negative reviews.

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