S&P says fallen angels could reach new 18-year high with 82 issuers

By Susanna Moon

Chicago, March 11 - Standard & Poor's said that 82 companies around the world are listed as potential fallen angels, a new 18-year high. They have debt totaling $209.13 billion.

The previous record was reached last month with 75 potential fallen angels, S&P said. The list contains companies rated BBB- with either a negative outlook or ratings on CreditWatch with negative implications.

By comparison, the year 2008 saw an average of 47 potential fallen angels each month, which had increased steadily since the second quarter of 2007, the agency said.

Sectors poised to lead fallen-angel incidence include non-water utilities with 10 companies, followed by consumer products and banks with nine issuers each, and media and entertainment and homebuilders/real estate companies with six issuers each.

By debt volume, the lineup among potential fallen angels is led by finance companies, followed by the automotive and retail and restaurants sectors.

Globally, 19 companies moved to speculative-grade territory so far this year, with rated debt worth $89.96 billion.

"Fallen angel activity generally increases during periods of weak real GDP growth and declines when GDP is strong," Diane Vazza, head of S&P's global fixed-income research group, said in the release.

"This inverse correlation is not surprising because companies' aggressive leverage at the peak of the economic cycle makes them vulnerable to potential credit downgrades when economic conditions deteriorate, resulting in an increase in fallen angels in and around troughs in the economic cycle."

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