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Number of 'potential fallen angel' bond issuers plateaus: S&P.

NEW YORK, May 2 Kyodo

The number of global corporate or sovereign bond issuers whose credit ratings are in danger of becoming speculative grade remains high but the increase in such issuers is beginning to level off, Standard & Poor's said in a survey released Wednesday.

The trend indicates the credit quality of such bond issuers in the United States and emerging markets is stabilizing, the U.S. credit rating agency said.

''The high number of potential fallen angels is not surprising,'' S&P said, defining a fallen angel as ''an issuer whose credit rating falls to BB-plus and below from BBB-minus and above.''

S&P defines credit ratings of BB-plus and below as speculative grade.

But investors should not be concerned at the high number of potential fallen angels as ''increases in downgrades per upgrade over four years have leveled at just over five downgrades per upgrade,'' the agency said.

In the near term, the relatively high potential number of fallen angels in the U.S. is expected to remain constant with outlooks on the ratings of 31% of U.S. companies being negative, 63% stable and only 6% positive, it said.

In emerging markets, the outlook distribution is 27% negative, 62% stable, and 11% positive, it said.

S&P has identified 63 bond issuers around the world that have fallen angel potential, down six from six months earlier.

In the first quarter of this year, S&P cut the ratings of 15 issuers with total outstanding bonds of $19.3 billion to speculative grade from investment grade.

During the same period, the agency upgraded the ratings of 16 issuers with total outstanding bonds of $23.0 billion to investment grade from speculative grade.

''In the past 15 years, there have been 393 fallen angels and 417 rising stars,'' it added.
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Publication:Japan Weekly Monitor
Date:May 6, 2002
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