S&P Rising Stars at Lowest Level Since 2003

Includes: FIS, SLM
by: Research Recap

Standard & Poor’s Ratings Services upgraded two issuers to investment grade (’BBB-’ and higher) from speculative grade (’BB+’ and lower) this past month, bringing the tally of rising stars to 16 issuers so far this year, affecting debt worth US$51.46 (€34.84) billion.

This is the lowest year-to-date tally of rising stars since 2003, when 14 issuers had ratings raised to investment grade.

S&P defines potential rising stars as entities rated ‘BB+’ with either a positive outlook or ratings on CreditWatch with positive implications. Since last month, two issuers were removed and two issuers were added to the list of global potential rising stars, leaving the total unchanged at 10 issuers with US$12.07 (€8.17) billion in rated debt. This is the lowest tally on record since the series began in 2002.

U.S.-based financial information processor and S&P 500 constituent Fidelity National Information Services Inc. (NYSE:FIS) now leads the list of largest potential rising stars, poised to ascend to investment grade with about US$3.29 (€2.23) billion in rated debt.

The 67 fallen angels so far this year have accounted for rated debt worth US$224.18 (€151.80) billion. By debt volume, the current fallen angel tally nearly matches that of the US$226.42 billion in all of 2008.

By count, finance companies lead 2009’s fallen angels to date with 12 entities, followed by banks with nine entities and utilities with eight entities.

The number of global potential fallen angels decreased by five from this past month’s report to a total of 70 issuers with US$186.47 (€126.26) billion in rated debt. These companies are rated ‘BBB-’ and have either a negative outlook or ratings on CreditWatch with negative implications. Sectors poised to lead fallen angel incidence are banks with 16 entities, followed by consumer products with nine entities and metals, mining, and steel with six entities.

SLM Corp. (NYSE:SLM), formerly known as Sallie Mae, is the largest potential fallen angel this month, with US$32.50 (€22.01) billion in rated debt.