Mon, Apr 24, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Fitch: U.S. corporate bond downgrade rate 3% in second half 2009 vs 20% first half

Friday, February 19, 2010
Opalesque Industry Update - According to a new Fitch Ratings report, U.S. Corporate Bond Market: A Review of Fourth-Quarter and 2009 Ratings and Issuance Activity, the par value of U.S. corporate bonds affected by downgrades decreased for the third consecutive quarter in the last three months of 2009 to $42.9 billion or 1.2% of market volume, the lowest tally since the second quarter of 2007.

'With upgrades affecting $40.7 billion in bonds, the ratio of downgrades to upgrades was nearly even at year-end, a strong departure from rating activity in the first half of the year when downgrades towered over minimal upgrades' said Eric Rosenthal, Senior Director of Fitch Credit Market Research.

Downgrades continued to slow across the investment grade and speculative grade segments of the market at year-end.

The par downgrade rate (as a share of U.S. corporate bonds outstanding) was 23% in 2009, slightly below 2008's 24%. The vast majority, close to 90%, of the year's negative rating activity occurred in the first half of the year. For perspective, the par downgrade rate was 15.3% in 2001 and 23.4% in 2002.

The investment grade portion of the market experienced a downgrade rate of 20.1% in 2009 and the speculative grade segment, 34.7%. The share of bonds upgraded over the course of the year was 1.8% and 11.2%, respectively, across the two areas.

'The par downgrade rate associated with financial firms in 2009 was 36.5%, substantially higher than the downgrade rate of 12.7% recorded across industrials' said Mariarosa Verde, Managing Director of Fitch Credit Market Research.

Downgrades across financials had a particularly deep impact on the 'AAA' and 'AA' rating categories. At the end of the year, 'AAA' and 'AA' bonds had contracted to just 16.3% of market volume, down from 23.1% at the end of 2008 and 31.4% at the end of 2007.

The speculative grade portion of the market grew to 20.8% at the end of 2009, from 17.5% at the end of 2008 and 2007.

New issuance totaled $626.6 billion in 2009, up 3% year over year. Industrial issuance however grew 65% over the course of the year while financial issuance tumbled 55%.

The market's par rating composition at year-end consisted of the following: 'AAA', 0.7%; 'AA', 15.6%; 'A', 35.9%; 'BBB', 27.0%; 'BB', 8.2%; 'B', 6.8%; and 'CCC'-'C', 5.8%.-KM- To view full 20-page report, click Source

- KM -

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: Carden Capital bets on volatility[more]

    Bailey McCann, Opalesque New York for New Managers: Machine driven strategies are having a bit of a moment in the hedge fund world right now. Systematic funds have outperformed other strategies at a time when all ey

  2. Sprott AM to sell Canadian diversified fund business to management-led group[more]

    Komfie Manalo, Opalesque Asia: Toronto-based asset management company Sprott Asset Management LP (SAM) has entered into an agreement to sell its Canadian diversified fund business to a management-led group. Under the deal, the new group will have

  3. Investing - These hedge funds (and Madeleine Albright) are betting on a debt crisis, Hedge funds are upping their bets on the death of the traditional retailer, $20bn hedge fund recaps Corizon[more]

    These hedge funds (and Madeleine Albright) are betting on a debt crisis From Yahoo.com: There could be a big debt crisis brewing in places like China, India, Latin America and Africa -- and a growing number of investors are amassing war chests to cash in on the distress. Albright Capital

  4. Universities looking to defend endowments from Republican tax plan[more]

    From PIOnline.com: Some of the richest U.S. colleges are pushing back against scrutiny by Congress over the tax-exempt status of university endowments. Lobbying disclosure forms show almost two dozen schools such as Princeton University, University of Notre Dame and Cornell University are including

  5. Activist News - GAM touts 'tangible results' of turnaround as activist fight hots up, Bill Ackman not done with Herbalife, says his fight could get legs in May, Activist hedge fund CIAM says Euro Disney's buyout offer not fair for minority investors[more]

    GAM touts 'tangible results' of turnaround as activist fight hots up From FNLondon.com: GAM, the Swiss asset manager at the center of an attempted boardroom putsch by activist hedge fund RBR Capital, said its first-quarter results amounted to "tangible" proof that its management's plan f