Fallen angels exceed rising stars for first time since 2003, S&P says

By Jennifer Chiou

New York, July 13 - Fallen angels are now outnumbering rising starts for the first time since 2003 after the biggest monthly number of downgrades to junk since that year, according to a Standard & Poor's "Global Potential Fallen Angel Report."

Nine companies have lost their investment-grade status since the update in June, S&P said.

"This month, fallen angels have overtaken rising stars by a margin of eight entities," noted Diane Vazza, head of S&P's global fixed income research group, in the report.

"This is a reversal of the pattern seen in 2004 and 2005."

For 2006 through July 11, 25 fallen angels have been recorded on rated debt worth $34 billion, the report noted.

Simultaneously, the number of entities at risk of declining into fallen-angel territory decreased relative to one month ago and remains below its year-ago level, S&P said.

As of July 11, there were 40 entities globally at risk of becoming fallen angels, with rated debt totaling $63.7 billion - two fewer than the 42 reported a month ago and seven fewer than the 47 in July 2005, the report said.

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

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