S&P: More Downgrades Coming
August 27, 2008
Standard & Poor’s issued a report earlier today that found the outlook for corporate bonds to be increasingly negative and singled out five unsurprising sectors where it expects to see significant additional downgrades.
S&P analysts say the financials, transportation, automotive, forest products and building materials, and media and entertainment sectors may produce significant numbers of defaults over the next year because of “their relatively high negative bias or because their level of downgrade potential far exceeds their historical level."
The report notes that the housing slump, high oil prices, and decreased consumer spending have contributed to an overall deterioration of credit quality across the U.S. It said that this year has seen 361 downgrades and 130 upgrades, whereas all of 2007 saw 382 downgrades and 277 upgrades.
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