Global potential fallen angels drop off slightly, S&P says

By Jennifer Chiou

New York, June 9 - The number of issuers at risk of declining into fallen-angel territory decreased from a month ago and remains below its level at the same period in 2005, according to a Standard & Poor's "Global Potential Fallen Angel Report."

"As of June 7, 2006, there were 42 entities globally at risk of becoming fallen angels, with rated debt totaling $51.9 billion," noted Diane Vazza, head of S&P global fixed income research group.

"This is two fewer than the 44 reported one month ago and six less than the 48 in June 2005."

At the same time, the report said, the number of fallen angels - issuers that were downgraded to speculative grade from investment grade - accelerated, with 16 fallen angels recorded through June 7 on rated debt worth $25.2 billion.

This is an increase of five from the agency's report last month.

S&P added that the majority of additions were acquisition-related.

Fallen angels still trail rising stars in the current year, but by only one compared with 19 at the same point in 2005, the report said.

Sectors most vulnerable to generating fallen angels by count are media and entertainment, oil and gas exploration and production, retail/restaurants, capital goods, high technology, insurance, chemicals packaging and environmental services, and utilities, the report said.

Potential fallen angels are companies rated BBB- and on CreditWatch negative or with a negative outlook.

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