Distress Ratio At 20-Month High, Says Report
In November, the U.S. distress ratio recorded its largest monthly increase in five years, rising to 4.9% from 2.3% a month ago and 2.1% 12 months ago, according to an article published today by Standard & Poor’s. The report, titled “U.S. Distressed Debt Monitor: Biggest Increase In Distressed Ratio In Five Years (Premium)” says that the increase in distress accompanies considerable widening in nondistressed speculative-grade bond spreads, which rose to 502 bps on Nov.
15 from 392 bps on Oct. 13, despite recent actions by the Federal Reserve to stimulate credit markets.
“As of Nov. 15, distressed issues cumulatively affected debt worth $36.2 billion, more than four times the $8.6 billion reported last month,” said Diane Vazza, head of Standard & Poor’s Global Fixed Income Research Group. “Based on debt volume, the finance companies sector had the largest exposure, constituting 45% of the total debt affected, followed by media and entertainment at just over 20%.”