S&P: Potential fallen angels outpace likely rising stars; Europe leads

By Susanna Moon

Chicago, Oct. 20 - Standard & Poor's said it upgraded four issuers to investment grade from speculative grade and added two more fallen angels since its last report. But the number of issuers at risk for downgrade to speculative grade vastly outnumbered those headed for an upgrade from junk, with Europe taking the lead.

The tally now stands at 29 rising stars and 30 fallen angels in 2011 through Oct. 6, according to an agency press release.

Meanwhile, there are 16 issuers poised for upgrades to investment grade, down by one since last month.

In comparison, there are 40 potential fallen angels, or issuers rated BBB- with either a negative outlook or ratings on CreditWatch with negative implications, with rated debt worth $315.1 billion. That count is down by two since the last report.

"The decrease in potential rising stars implies that the number of rising stars may slow through the rest of the year," Diane Vazza, head of S&P's global fixed-income research, said in the release.

Fallen angels

The four issuers added to the list of potential fallen angels are Franz Haniel & Cie GmbH, Italcementi SpA, Colbun SA and Transocean Inc. The two fallen angels since the last report are Controladora Mabe SA de CV and Buzzi Unicem SpA.

"Europe has overtaken the U.S. with the highest number of new fallen angels for the year, with 15 entities for Europe versus 14 entities for the U.S.," Vazza noted.

Banks head the list of potential fallen angels with nine issuers. Five of these banks are based in the Republic of Portugal, which is also on the list of potential fallen angels. Sovereigns represent five of the potential fallen angels but have nearly triple the amount of the banks' rated debts at $187.7 billion.

Portugal remains the largest potential fallen angel this month, with $112.1 billion of rated debt.

Thirteen of the companies on the potential fallen angels list are constituents of various S&P indexes.

Rising stars

The 29 rising stars this year account for $134.1 billion of rated debt, compared with $230.7 billion of rated debt for the 30 fallen angels so far this year.

The four new rising stars are Mondi Group, Pernod Ricard SA, the Republic of Turkey and AES Chivor & CIA SCA ESP. With the addition of Turkey, the rising stars' debt nearly doubled to $134.1 billion from $73.8 billion, the release noted.

Mondi Group is the only new rising star that was on the list of potential rising stars last month.

The rising stars are spread out fairly evenly across the subsectors, with each subsector accounting for one or two issuers.

Potential rising stars, or those rated BB+ with either a positive outlook or ratings on CreditWatch with positive implications, accounted for $68.8 billion of rated debt.

The number of potential rising stars fell by one to 16, which is the lowest total since January, Vazza said.

S&P added two issuers to the list of potential rising stars since the last report and removed three. The Republic of Indonesia remains the largest potential rising star, with $51.1 billion of rated debt.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.