Consumer-Reliant Sectors Remain Under Highest Credit Stress - S&P

Default activity in 2009 has been heavily concentrated in the media and entertainment sector.

Consumer products, media and entertainment, and retail/restaurants remain the most negatively affected sectors amid the economic downturn, according to Standard & Poor’s Ratings Services.

“These sectors consistently have the highest levels of risk among our current lists of distressed companies (defined as speculative-grade companies with securities trading in excess of 1,000 basis points above U.S. Treasuries), weakest links (companies rated ‘B-’ or lower with either a negative outlook or ratings on CreditWatch with negative implications), and potential bond downgrades (investment-grade or speculative-grade companies that have either a negative outlook or ratings on CreditWatch negative).

“In line with the broader nonfinancial universe, these sectors have a ratings mix with the greatest concentration in the ‘B’ rating category, which includes ‘B+’, ‘B’, and ‘B-’. Despite having ratings concentrated in this category, the overall ratings distribution for these sectors has improved in recent months, in part because of an increase in the number of defaults from the lowest-rated companies in these sectors.

The lowest-rated companies transitioning to default leaves behind the stronger, more highly rated companies."

For details, see: “Stress In Corporate America: Consumer-Reliant Sectors Face Easing Conditions But Are Still The Hardest Hit (Premium).“