Potential Credit-Rating Downgrades Reach 30-Month High, S&P Says

The number of potential credit rating downgrades reached 613 at the end of November, the highest level in 30 months, as Europe’s debt turmoil persists, according to Standard & Poor’s.

That’s an increase from 599 in October, according to a report by S&P’s Global Fixed Income Research released today. About 18 percent of the possible cuts are banks, with European lenders making up more than half, the report said. The potential downgrades affect issuers rated AAA to B- and have either a negative rating outlook or are on CreditWatch with negative implications.

“The number of potential bond downgrades has been steadily increasing during the past two years and is now at a level not seen since June 2010,” said Diane Vazza, head of S&P’s Global Fixed Income Research, in a statement about the report.

The gap between potential downgrades and upgrades has widened this month to the most since May 2010 “due to the sovereign crisis in Europe,” Vazza said.

Fifty-two percent of the possible cuts are speculative grade with B ranked securities making up the largest portion of issuers. High-yield, high-risk, bonds are rated below Baa3 by Moody’s and lower than BBB- at S&P.

To contact the reporter on this story: Matt Robinson in New York at mrobinson55@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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