Distressed credits are speculative-grade rated issues that have option-adjusted spreads of more than 1,000 basis points (bps) relative to Treasuries. Highlights from this month's distressed credit report are: After a slight decline in April, the Standard & Poor's distress ratio has fallen by over six and a half percentage points in the last month to 15.1% (see Chart 1). The decrease in the distress ratio follows a recent contraction in speculative-grade bond spreads, which fell 67 bps to 666 bps on May 15, from 733 bps on April 15. Despite the slight drop, the distress ratio is still well above the 0.9% recorded in May 2007. By debt volume, the leading sector of distress is media and entertainment at $37.7...
Companies mentioned in this report are:
- Claire's Stores Inc.
- Realogy Group LLC
- Berry Plastics Corp.
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.