Media Among Segments at Most Financial Distress Risk, S&P Says
Debt issuers in media and entertainment, technology, and health care accounted for 13 of this year’s 31 defaults through July, according to a report today by Standard & Poor’s fixed-income research group.
Those industries have had rating reductions that “far exceeded” increases, the highest risk of distressed issuers and the most ratings lower than B- with a negative outlook or on watch for a grade cut, according to a report by S&P’s Global Fixed Income Research.
“The three sectors’ current negative biases are significantly lower than their long-term averages,” analysts led by Diane Vazza said in the statement.
Distressed debt, with yields of at least 1,000 basis points more than similar-maturity Treasuries, has returned more than double the average high-yield bond in the U.S. this year, gaining 7.3 percent through yesterday, according to Bank of America Merrill Lynch index data. An index of U.S. speculative-grade debt, rated below Baa3 by Moody’s Investors Service and lower than BBB- at S&P, returned 3.2 percent, the data show.
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