Distress Ratio Hovers Around 12% Through The Dog Days Of Summer, Article Says

After getting off to a heady start in 2010, the pace of the economic recovery has slowed recently, said an article published today by Standard & Poor's, titled "U.S. Distressed Debt Monitor: Distress Ratio Increases Nominally To 12.4% (Premium)." "Credit market indicators in the U.S. appear to have weakened in the past few weeks as doubts about the sustainability of a recovery emerge," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "As a result, the speculative-grade corporate spread has leveled off and remains consistent with a recession. After hitting a low of 537 bps on April 26, the speculative-grade corporate bond spread widened to 665 bps as of Aug. 16. Along with this, the distress ratio rose only slightly, to 12.4% as of Aug. 16 from 12.2% this past month." Standard & Poor's distress ratio is defined as the number of distressed securities divided by the total number of speculative-grade-rated issues. Distressed credits are speculative-grade-rated issues that have option-adjusted spreads of more than 1,000 bps relative to Treasuries. "Among distressed bonds, the total number of companies with issues trading with spreads of 1,000 bps and higher is currently 120," said Ms. Vazza. "This is only four more than the total from July, with an increase in the count of affected issues to 175 this month from 168 in July." With a slight increase in the distress ratio, the amount of affected debt also picked up--to $69.5 billion from $65 billion this past month. Based on debt volume, the media and entertainment, high technology, and oil and gas sectors accounted for 57.5% of the total debt outstanding. The standard version of this article is part of our standard Global Fixed Income Research content. The premium version contains expanded analysis of the article's most significant points, typically broken out by sector and region. Also in the premium version are in-depth charts and tables, the underlying data of which are available for download. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided. Media Contact: Mimi Barker, New York (1) 212-438-5054, [email protected] Analyst Contact: Diane Vazza, New York (1) 212-438-2760

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