U.S. Distress Ratio Continues Its Chilling Climb, Says Report
The U.S. distress ratio accelerated by five percentage points to 16.9% in February, from 11.1% last month, according to an article published yesterday by Standard & Poor’s. The report, titled “U.S. Distressed Debt Monitor: Largest Monthly Gain In Nearly A Decade (Premium),” says that the ratio is at its highest level since June 2003, and significantly above its 1.0% level one year ago.
“The increase in distress accompanies the continued widening in speculative-grade bond spreads, which rose nearly 80 basis points in a month’s time to 714 basis points on Feb.
15, from 637 basis points on Jan. 15,” said Diane Vazza, head of Standard & Poor’s Global Fixed Income Research Group. “The leveraged-loan market also experienced a rapid advance in distress in January. The S&P/LSTA Leveraged-Loan Index distress ratio shot up to 6.9% in January, from 3.2% in December. This is one of the highest monthly rates in this series and the highest reading since March 2003. For the past two years, the distress ratio has been near or below 1%.”