Key Takeaways
- 'BBB' category issuers have exhibited more stability through interest rate cycles than their speculative-grade counterparts. 'BBB' downgrade ratios are nearly uncorrelated with 10-year benchmark rates during upcycles, as opposed to higher positive correlations for speculative grade.
- Rising stars still outnumber fallen angels, although potential fallen angels appear to have bottomed out and are beginning to rise in number from recent historical lows.
- Despite overall relative stability of 'BBB's, commercial real estate and chemicals are sectors to watch for fallen angel risk.
- Fallen angel downgrades are unlikely to remain at the lows of the past year, and we estimate that the amount of debt associated with U.S. and EMEA nonfinancial fallen angel downgrades will increase to $102 billion in the next 12 months.
The global economy appears on track for a soft landing in 2024. Inflation is decreasing and central banks are considering easing rates. S&P Global Ratings projects inflation, labor, and economic growth rates will differ between the U.S. and Europe, with the U.S. typically outperforming (see "The U.S. Economy Bucks The Global Trend," published on RatingsDirect on Feb. 29, 2024).
Meanwhile, 'BBB' issuers in general have weathered inflation and higher interest rates over the past two years. In 2023, for instance, there were twice as many financial and non-financial rising stars (speculative-grade issuers upgraded into investment grade) than fallen angels (investment-grade issuers downgraded into speculative grade), 38 to 19. In January 2024, three rising stars have emerged and there were no fallen angels.
Against this backdrop, we anticipate the amount of debt associated with U.S. and Europe, Middle East, and Africa (EMEA) nonfinancial fallen angel downgrades will increase to $102 billion over the next 12 months, from a notably low $39.7 billion in the 12 months to end-January 2024. We do not expect fallen angel levels to remain at such a low level for a second consecutive year in 2024. Since 2000, each year when nonfinancial fallen angel debt volume dipped below $40 billion was followed by a year when the downgraded amount more than doubled.
Chart 1
'BBB' Issuers Remain Resilient In The Face Of Rate Cycles
The sharp rise in global benchmark yields highlighted the resilience of 'BBB' issuers to interest rate cycles compared with their speculative-grade peers.
To explore this further, we removed high-frequency movements and long-term trends from the yield on 10-year U.S. Treasuries since 2008, which allows us to identify cycles and turning points in interest rates over time (see chart 2). This helps to split up the sample into periods when rates were trending up versus when they were trending down.
Chart 2
We then look at downgrade ratios for the 'BBB' and lower rating categories and examine their correlations with U.S. Treasury yields during interest rate upcycles. Downgrade ratios are the number of downgrades divided by the sum of the number of downgrades and upgrades. For the 'BBB' category and above, the relevant benchmark is the 10-year Treasury, but for speculative-grade categories, five-year Treasuries are likely better due to the shorter tenors at which they typically issue debt.
'BBB' downgrade ratios are nearly uncorrelated with 10-year benchmark rates during upcycles, with a correlation of -0.05 (see chart 3). This contrasts with the relatively higher positive correlations seen for speculative grade, especially at 'B' and below. These suggest that in periods when funding costs are rising, interest rates could drive up speculative-grade downgrades even more on top of sector-specific or idiosyncratic reasons. 'BBB'-rated issuers can typically withstand such upswings in rates.
Chart 3
By now, however, rates have most likely peaked as the largest rate increases since the 1980s wind up. Correlations of downgrade ratios and benchmark rates during downcycles indicate that for all the categories covered, the correlation is negative. That is, downgrade ratios still tend to rise during periods when rates are falling as sector-specific or idiosyncratic factors dominate rating actions even more.
Moreover, downcycles in interest rates typically coincide with slowing economic growth. But again, 'BBB'-rated issuers have the lowest of these negative correlations by far when compared with the speculative-grade categories.
Chart 4
Structural Factors Are Contributing To 'BBB' Stability
The relative credit strength of 'BBB'-rated issuers means they are generally more stable than speculative-grade issuers. They also have interrelated, structural advantages in times of rising interest rates. These include:
Investment-grade companies tend to borrow more fixed rate debt. This means that in addition to paying lower interest rates, changes in interest expense would only occur at maturity. This significantly expands the timeframe required for rising rates to have an impact.
Investment-grade companies typically have more diverse capital structures, including higher levels of cash. This provides more options for interest rate management. In some cases, investment-grade issuers have chosen to pay off debt rather than refinance it, particularly as profitable investment opportunities diminished with higher required rates of return. In certain instances, paying off debt reduced interest expense even as rates were rising.
Higher rated companies tend to have wider margins and more steady cash flows. This reduces the chances that a company specific shock and/or rising rates would lead to an interest coverage ratio decline significant enough to squeeze ratings.
Recent Trends Confirm 'BBB' Stability Through Rate Cycles
Recent rating trends confirm the relative stability of 'BBB' issuers through rate cycles. The share of investment-grade issuers that became fallen angels has been trending at about 1% since the beginning of 2023, marginally above the all-time low (see chart 5). Within the 'BBB' category, downgrade rates have also been low and largely trending sideways in EMEA for much of 2023 (see chart 6). However, in the U.S. the trailing 12-month 'BBB' downgrade rate has nearly doubled to 2.9% in January 2024 since the beginning of 2023.
Chart 5
Chart 6
Fallen Angels Likely To Rise But From A Low Base
Rating performance trends suggest increased fallen angel activity ahead, but still far below recent peaks. Potential fallen angels are issuers rated 'BBB-' with negative outlooks or CreditWatch placements. In the U.S. and EMEA, the number of potential fallen angels rose from an all-time low of 12 in July 2023 to 20 by January 2024 (see chart 7). This resulted in total debt of potential fallen angels rising by $6.4 billion to $98.6 billion.
A total of $78.6 billion of debt was added from new potential fallen angels during this period. Mitigating this was a reduction of $72.4 billion in debt associated with potential fallen angels, 88% of this was due to removals of negative outlooks or CreditWatch placements.
Despite the increase in the number of potential fallen angels since July, the number remains relatively low compared with historical levels. Over the past four years, the monthly count of potential fallen angels has averaged 32.8. Even though the number of potential fallen angels has risen to 20, it remains well below the average of the past four years.
Chart 7
Chart 8
Meanwhile, the number of potential rising stars is falling--i.e., those issuers rated 'BB+' with positive outlooks or CreditWatch placements. This is no surprise because there were twice as many rising stars as fallen angels last year. The U.S. and EMEA still have 19 potential rising stars, broadly on par with the number of potential fallen angels.
Chart 9
Let's now look at those issuers we rate in the 'BBB' category with negative outlook or CreditWatch placements. These entities account for a negative bias that has been stable at about 10% for both the U.S. and EMEA since 2022. The bias is less than half the corresponding level from where it was in January 2021.
Chart 10
On balance, these forward indicators align with our results from the first section--that 'BBB' issuers tend to be relatively stable through both interest up- and downcycles (and more so in upcycles).
Funding Costs Are Easing From High Levels
Funding costs are also beginning to ease across the board. Benchmark rates have peaked and most market forecasters expect the world to avoid a recession. U.S. dollar spreads are narrowing for all rating categories (see chart 11). This spread tightening is happening more for 'BB' issuers relative to 'BBB' issuers because 'BB' spreads rose more during the latest upcycle. This results in a lower marginal cost of becoming a fallen angel. The additional funding costs between 'BB+' and 'BBB-' is now trending at about 30 basis points (bps), compared with its recent peak of 84 bps in mid-2022 (see chart 12).
Chart 11
Chart 12
With both benchmark yields and spreads easing, companies are embracing bond issuance again. In the U.S., 'BBB' issuance appears to have bottomed in the third quarter of 2023. Fourth quarter issuance edged up and the first quarter of 2024 appears on pace to match or surpass that (see chart 13). In EMEA, that bottom may have occurred in the fourth quarter of last year. There are early indications the first quarter of 2024 is on pace to pick up from there.
Chart 13
Chart 14
Refinancing Costs Are Poised To Rise As Debt Matures, But The Impact Will Be Relatively Muted
Even with funding costs starting to ease for new issuance, 'BBB' issuers will face higher refinancing costs as their debt matures in the next few years. Bonds issued are starting to mature that were issued back when benchmark rates were near zero in 2020-2021.
Current interest rates are notably higher than the lows reached in 2021. The median coupon rate of a 'BBB' bond from a nonfinancial issuer reached a low of 2.4% in the U.S. and less than 1% in Europe in 2021. By 2023, the median coupon rate had risen to 5.5% in the U.S. and 4.25% in Europe (see charts 15 and 16).
Chart 15
Chart 16
At current yields, borrowers would face an increase in funding costs of about 1.9 percentage points in the U.S. and 2.4 percentage points in Europe on their 'BBB' bonds maturing in 2024.
The impact on refinancing costs should abate after this year, as median coupons of maturing debt gradually rise, and as benchmark yields decrease from current levels. Furthermore, a relatively small portion of 'BBB' nonfinancial debt is set to mature this year. This will soften the impact of current interest rates on overall funding costs.
In the U.S., $218 billion in 'BBB' category bonds from nonfinancial corporates will mature in 2024, and this represents under 6% of 'BBB' debt. For Europe, $169 billion in 'BBB' bonds mature in 2024, and this represents about 9% of the region's 'BBB' debt.
While interest rates are expected to start coming down later this year, the higher funding costs borrowers face for maturing debt may offset some of the benefit.
Commercial Real Estate And Chemicals Are The Sectors To Watch For Fallen Angel Risk
Sectoral trends may not be uniform. We continue to watch the commercial real estate and chemicals sectors for higher potential fallen angel risk.
U.S.
Fears of a possible recession in 2024 have given way to expectations for a soft-landing scenario, with concurrent rate cuts to encourage economic growth. Momentum appears to be toward the upside with three rising stars since the beginning of year in the U.S. Center stage now are the uncertainties associated with the upcoming elections and any related geopolitical implications on trade and supply chains.
Despite the alleviated recession fears, certain sectors remain under the overhang of the operating challenges of the past couple of years. The broad destocking trend and weak economic growth have stifled demand in the chemicals sector. Three companies from this sector are now on the potential fallen angels list--a sector high. The extent to which demand recovers in the second half of 2024 will determine this sector's prospects.
Other sectors have struggled for longer. The homebuilders and real estate sector in general continues to fare relatively well, but we are monitoring the office segment of commercial real estate given its funding concentration at regional U.S. banks. Office Properties Income Trust, a real estate investment trust focused on owning and leasing office properties, fell below 'BBB-' in March 2023 and has continued its precipitous fall to a current 'CCC' rating because of risks associated with refinancing near-term maturities.
In December 2023, we downgraded Brookfield Property Partners L.P. to 'BB' from 'BBB-' because of persistent secular headwinds in its office segment.
Elsewhere, the consumer products sector continues to face less acute, though perhaps more persistent operating challenges. Pressures appear to have bottomed out, but operational performance remains well below pre-pandemic levels as a full recovery remains elusive.
Europe
In Europe, positive rating actions in several sectors accounted for a prevalence of rising stars over fallen angels. Supporting this were strong credit metrics achieved in 2021 and 2022. This stemmed from a strong rebound in demand, favorable trends in consumer preferences, and mega trends such as the energy transition. Notable examples include the return to investment grade of two European airlines: Deutsche Lufthansa AG and British Airways PLC. Both regained most of the business lost during the pandemic.
Following these rating actions, the number of potential rising stars in Europe has contracted and is now outnumbered by potential fallen angels. In 2024, we expect the number of rising stars to be much lower than last year. There are still positive rating actions, such as the upgrade of Cellnex Telecom S.A. to investment grade, and we expect to add new names to the potential rising stars list during the year.
Of the potential fallen angels in Europe, half are in the commercial real estate sector (see table 3 in the appendix). The sector already led the number of fallen angels in 2023. There are signs of stabilization in the values of some real estate assets that have been penalized in the past two years, but the structural increase in companies' cost of debt is a big test and will gradually play out as debt matures.
There is no concentration of potential fallen angels in other European sectors. However, a few factors may test the credit quality of some issuers in the 'BBB' category. For example, the negative effects of the structural increase in the cost of energy, added to the gradual rise in the companies' cost of debt and to the slowdown in demand could be a dangerous combination. The strong negative outlook bias on the commodity chemical sector shows the negative impacts of this combination.
Fallen Angel Activity Is Unlikely To Remain At Such Recent Lows
The $39.7 billion in fallen angel volume in the U.S. and EMEA over the trailing 12 months (through January 2024) has been lower in comparison with the annual totals from seven of the past 10 years. But we do not expect fallen angel activity to remain as subdued this year as in 2023.
The upside surprises to economic growth in 2023 likely helped to keep the volume of fallen angel downgrades so low over the past year. In 2024, our economists project that U.S. GDP growth will slow incrementally to 2.4% (down slightly from 2.5% in 2023). For the eurozone, we expect the GDP growth will be more modest, at 0.8% in 2024, a marginal rise from 0.6% in 2023.
As such, we anticipate the amount of debt associated with fallen angel downgrades is likely to increase over the next 12 months, rising to $102 billion for nonfinancial corporates in the U.S. and EMEA from Feb. 1, 2024, through Jan. 31, 2025 (see table 1). This estimated volume would be in line with the annual average over the past 10 years, and this would return annual total of fallen angel downgrades back near the level from 2022. Furthermore, the $102 billion estimate for fallen angel downgrades aligns well with the amount of debt from nonfinancial potential fallen angels.
In this estimate, fallen angel downgrades would affect about 1.9% of 'BBB' debt.
For the U.S., we estimate that nonfinancial corporate fallen angel downgrades would reach $75.4 billion, or 2.0% of 'BBB' debt. By comparison, the trailing twelve-month 'BBB' downgrade rate in the U.S. was 2.9% at the end of January 2024.
In EMEA, we estimate this would reach $26.7 billion, or 1.4%, of 'BBB' debt, (slightly below the trailing twelve-month 'BBB' downgrade rate of 1.6% in EMEA).
Table 1
| Fallen angel estimates: Feb. 1, 2024 to Jan. 31, 2025 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Region | Fallen angel estimate ($ bil) | Fallen angel estimate (%) | ||||||
| U.S. + EMEA | 102.0 | 1.8% | ||||||
| EMEA | 26.7 | 1.4% | ||||||
| U.S. | 75.4 | 2.0% | ||||||
| Data as of Feb. 1, 2024. Includes only nonfinancial projection from Feb. 1, 2024 through Jan. 31, 2025. Source: S&P Global Ratings Credit Research & Insights. | ||||||||
Appendix
Hypothetical Fallen Angel Downgrade Estimate Analysis Approach
We use this hypothetical scenario analysis to estimate the amount of debt that could be affected by fallen angel downgrades over the next 12 months. This includes parent firms in the U.S. and EMEA rated in the 'BBB' category and all qualifying debt in their organizational hierarchies, as well as the qualifying debt of subsidiaries rated in the 'BBB' category if their parents are assigned other ratings.
Reported debt includes secured and unsecured bank loans, subordinated debt, medium-term notes, preferred stock, convertible debt, and drawdowns under medium-term note programs. It does not include commercial paper programs, shelf registrations, revolvers, or certificates of deposit.
The hypothetical risk weights for each rating level ('BBB+', 'BBB', and 'BBB-') approximate the relative long-term fallen angel rates in the U.S. and EMEA regions combined over a 12-month rolling horizon from April 2012 through January 2024 (see table 2).
Table 2
| Hypothetical fallen angel scenario risk weights | ||||||||
|---|---|---|---|---|---|---|---|---|
| (%) | ||||||||
| Scenario weights | ||||||||
| Outlook/CreditWatch | BBB+ | BBB | BBB- | |||||
| Positive outlook or CreditWatch | 0.0 | 0.0 | 0.0 | |||||
| Stable outlook | 0.2 | 0.8 | 5.1 | |||||
| Negative outlook | 1.0 | 5.0 | 20.0 | |||||
| Negative CreditWatch | 3.0 | 15.0 | 50.0 | |||||
| Average rate downgrade to speculative grade over a 12-month horizon (February 2013 - January 2024) | 0.3 | 1.6 | 7.8 | |||||
| Average rate downgrade to speculative grade over a 12-month horizon (February 2023 - January 2024) | 0.3 | 1.2 | 7.4 | |||||
| Data as of Feb. 1, 2024. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®. | ||||||||
The risk weights applied to the negative and positive outlooks and CreditWatch statuses represent estimates for fallen angel potential. This takes into account current economic conditions—with far more fallen angel risk among companies rated 'BBB-' and on CreditWatch with negative implications—and essentially no fallen angel risk weight for companies rated in the 'BBB' category with positive outlooks. The risk weights applied to each rating level reflect the downgrade rates that could be expected for that rating level given the average annual fallen angel rates since 2013, adjusted for outlooks and CreditWatch statuses. We then multiplied the debt distribution by each corresponding risk weight in this scenario and summed the total. We used this to calculate a hypothetical downgraded debt amount over the next 12 months.
Table 3
| 34 potential fallen angels globally | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 'BBB-' rated issuers with negative outlooks or on Creditwatch with negative implications | ||||||||||||
| Sector/subsector | Issuer | CreditWatch negative/negative outlook | New to the list this month | Country | Debt amount (mil. US$) | |||||||
| Automotive | Zhejiang Geely Holding Group Co., Ltd. | Negative | China | 2668 | ||||||||
| Capital goods | KION Group AG | Negative | Germany | 540 | ||||||||
| Capital goods | MasTec Inc. | Negative | U.S. | 1200 | ||||||||
| Chemicals, packaging, and environmental services | Braskem S.A. (Odebrecht S.A.) | Negative | Brazil | 6200 | ||||||||
| Chemicals, packaging, and environmental services | Celanese Corp. | Negative | U.S. | 14424 | ||||||||
| Chemicals, packaging, and environmental services | FMC Corp. | Negative | U.S. | 3400 | ||||||||
| Chemicals, packaging, and environmental services | Huntsman Corp. | Negative | U.S. | 1474 | ||||||||
| Consumer products | Becle, S. A. B. de C. V | Negative | Mexico | 1300 | ||||||||
| Consumer products | International Flavors & Fragrances Inc. | Negative | U.S. | 9054 | ||||||||
| Consumer products | JBS S.A. (J&F Investimentos S.A.) | Negative | Brazil | 47114 | ||||||||
| Financial institutions | AmFam Holdings Inc., (American Family Mutual Insurance Co., S.I.) | Negative | U.S. | 1000 | ||||||||
| Financial institutions | Argo Group International Holdings Ltd. | Watch Neg | U.S. | 275 | ||||||||
| Financial institutions | China Bohai Bank Co., Ltd. | Negative | China | 300 | ||||||||
| Financial institutions | Intercorp Financial Services Inc. (Intercorp Peru Ltd.) | Negative | Peru | 1300 | ||||||||
| Financial institutions | Tanner Servicios Financieros S.A. | Negative | Chile | 145 | ||||||||
| Health care | Fresenius Medical Care AG (Fresenius SE & Co. KGaA) | Negative | Germany | 7288 | ||||||||
| Health care | Viatris Inc. | Negative | U.S. | 21208 | ||||||||
| Homebuilders/real estate companies | Altarea SCA | Negative | France | 1944 | ||||||||
| Homebuilders/real estate companies | Argan SA | Negative | France | 540 | ||||||||
| Homebuilders/real estate companies | CPI Property Group S.A. | Negative | Luxembourg | 5480 | ||||||||
| Homebuilders/real estate companies | D.V.I. Deutsche Vermogens- und Immobilienverwaltungs GmbH | Negative | Germany | 378 | ||||||||
| Homebuilders/real estate companies | Heimstaden Bostad AB | Negative | Sweden | 9961 | ||||||||
| Homebuilders/real estate companies | Piedmont Office Realty Trust Inc. | Negative | U.S. | 1600 | ||||||||
| Homebuilders/real estate companies | SITE Centers Corp. | Negative | U.S. | 1875 | ||||||||
| Insurance | American Equity Investment Life Holding Co. | Watch Neg | U.S. | 1200 | ||||||||
| Media and entertainment | Choice Hotels International Inc. | Watch Neg | U.S. | 850 | ||||||||
| Media and entertainment | JCDecaux SE | Negative | France | 2484 | ||||||||
| Metals, mining, and steel | Kinross Gold Corp. | Negative | Canada | 1250 | ||||||||
| Retail/restaurants | ELO | Negative | France | 4945 | ||||||||
| Retail/restaurants | Walgreens Boots Alliance Inc., | Negative | U.S. | 9690 | ||||||||
| Telecommunications | Rogers Communications Inc. | Negative | Canada | 28590 | ||||||||
| Telecommunications | Telefonica Moviles Chile S.A. (Telefonica S.A.) | Negative | Chile | 500 | ||||||||
| Utilities | Nova Scotia Power Inc. (Emera Inc.) | Negative | Canada | 2446 | ||||||||
| Utilities | South Staffordshire PLC | Negative | U.K. | 290 | ||||||||
| Data as of Jan. 31, 2024. Potential fallen angels are defined as issuers rated 'BBB-' by S&P Global Ratings with negative outlooks or ratings on CreditWatch with negative implications, and which currently have bonds outstanding. Includes all rated issuers with valid outstanding debt at the time of the rating action. Valid debt includes issuer level debt (both secured and unsecured), bank loans, subordinated debt, medium term notes, preferred stock, convertible debt and drawdowns under MTN programs and excludes commercial paper programs, shelf registrations, certificates of deposit, and debt rated on a confidential basis. This debt may be rated above or below the issuer credit rating. Moreover, if a subsidiary's parent is itself a potential fallen angel, only the parent is counted. Source: S&P Global Ratings Credit Research & Insights. | ||||||||||||
Table 4
| Global fallen angels 2024 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| No fallen angels through Jan. 31, 2024 | ||||||||||||||
| Date | Issuer | To | From | Sector/subsector | Country | Rated debt affected (Mil. $) | ||||||||
| -- | -- | -- | -- | -- | -- | -- | ||||||||
| Data as of Jan. 31, 2024. Fallen angels are defined as investment-grade issuers currently with bonds outstanding that have been downgraded into speculative-grade (i.e. from 'BBB-' or above, to 'BB+' or below). Includes all rated issuers with valid outstanding debt at the time of the rating action. Valid debt includes issuer level debt (both secured and unsecured), bank loans, subordinated debt, medium term notes, preferred stock, convertible debt and drawdowns under MTN programs and excludes commercial paper programs, shelf registrations, certificates of deposit, and debt rated on a confidential basis. This debt may be rated above or below the issuer credit rating. Moreover, if a subsidiary's parent is itself a fallen angel, only the parent is counted. Source: S&P Global Ratings Credit Research & Insights. | ||||||||||||||
Table 5
| 26 potential rising stars globally | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| BB+' rated issuers with positive outlooks or on CreditWatch with positive implications | ||||||||||||
| Subsector | Issuer | CreditWatch Negative/Negative Outlook | New to the list this month | Country | Debt Amount (US$ Mil.) | |||||||
| Aerospace and defense | Hexcel Corp. | Positive | U.S. | 700 | ||||||||
| Aerospace and defense | Rolls-Royce PLC (Rolls-Royce Holdings PLC) | Positive | U.K. | 5164 | ||||||||
| Automotive | Tata Motors Ltd. (Tata Sons Pte. Ltd.) | Positive | India | 5285 | ||||||||
| Capital goods | Ali Holding S.R.L. | Positive | ac | 2250 | ||||||||
| Capital goods | Nexans S.A. | Positive | France | 648 | ||||||||
| Chemicals, packaging, and environmental services | Olin Corp. | Positive | U.S. | 2150 | ||||||||
| Financial institutions | Iccrea Banca SpA | Positive | Italy | 2980 | ||||||||
| Financial institutions | MBH Investment Bank Co. Ltd. (MBH Bank Nyrt) | Positive | Hungary | 1065 | ||||||||
| Financial institutions | Nexi SpA | Positive | Italy | 3591 | ||||||||
| Forest products and building materials | CEMEX S.A.B. de C.V. | Positive | Mexico | 5182 | ||||||||
| Forest products and building materials | Louisiana-Pacific Corp. | Positive | U.S. | 350 | ||||||||
| Metals, mining, and steel | Alcoa Corp. | Positive | U.S. | 3000 | ||||||||
| Metals, mining, and steel | Freeport-McMoRan Inc. | Positive | U.S. | 7462 | ||||||||
| Oil and gas | Antero Resources Corp. | Positive | U.S. | 9300 | ||||||||
| Oil and gas | Apache Corp. (APA Corp.) | Positive | U.S. | 9430 | ||||||||
| Oil and gas | Endeavor Energy Resources L.P | Positive | U.S. | 2000 | ||||||||
| Oil and gas | Hess Midstream Operations LP (Hess Corp.) | Watch Pos | U.S. | 2900 | ||||||||
| Oil and gas | Southwestern Energy Co. | Watch Pos | U.S. | 4200 | ||||||||
| Oil and gas | TechnipFMC Plc | Positive | U.K. | 1243 | ||||||||
| Retail/restaurants | Albertsons Cos. Inc., | Watch Pos | U.S. | 28312 | ||||||||
| Telecommunications | Cellnex Telecom S.A. | Positive | Spain | 10373 | ||||||||
| Telecommunications | PPF Telecom Group B.V. | Watch Pos | Czech Republic | 2430 | ||||||||
| Telecommunications | Videotron Ltee (Quebecor Inc.) | Positive | Canada | 3912 | ||||||||
| Transportation | Delta Air Lines Inc. | Positive | U.S. | 6750 | ||||||||
| Utilities | Enlink Midstream LLC, | Positive | U.S. | 6193 | ||||||||
| Utilities | Empresa Nacional del Petroleo | Positive | Chile | 2440 | ||||||||
| Data as of Jan. 31, 2024. Potential rising stars are defined as issuers rated 'BB+' by S&P Global Ratings with positive outlooks or ratings on CreditWatch with positive implications, and which currently have bonds outstanding. Includes all rated issuers with valid outstanding debt at the time of the rating action. Valid debt includes issuer level debt (both secured and unsecured), bank loans, subordinated debt, medium term notes, preferred stock, convertible debt and drawdowns under MTN programs and excludes commercial paper programs, shelf registrations, certificates of deposit, and debt rated on a confidential basis. This debt may be rated above or below the issuer credit rating. Moreover, if a subsidiary's parent is itself a potential rising star, only the parent is counted. Source: S&P Global Ratings Credit Research & Insights. | ||||||||||||
Table 6
| Global rising stars 2024 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q1 three rising stars | ||||||||||||||
| Date | Issuer | To | From | Sector/subsector | Country | Rated debt affected (Mil. $) | ||||||||
| 5/01/2024 |
NASCAR Holdings LLC |
BBB | BB+ | Media and entertainment | U.S. | 1410 | ||||||||
| 8/01/2024 |
MGIC Investment Corp. |
BBB- | BB+ | Insurance | U.S. | 650 | ||||||||
| 8/01/2024 |
Radian Group Inc. |
BBB- | BB+ | Insurance | U.S. | 1425 | ||||||||
| Data as of Jan. 31, 2024. Rising stars are defined as speculative-grade issuers currently with bonds outstanding that have been upgraded into investment-grade (i.e. from 'BB+' and below, to 'BBB-' and above). Includes all rated issuers with valid outstanding debt at the time of the rating action. Valid debt includes issuer level debt (both secured and unsecured), bank loans, subordinated debt, medium term notes, preferred stock, convertible debt and drawdowns under MTN programs and excludes commercial paper programs, shelf registrations, certificates of deposit, and debt rated on a confidential basis. This debt may be rated above or below the issuer credit rating. Moreover, if a subsidiary's parent is itself a rising star, only the parent is counted. Source: S&P Global Ratings Credit Research & Insights. | ||||||||||||||
Related Research
- The U.S. Economy Bucks The Global Trend, Feb. 29, 2024
- This Month In Credit: Rising Market Tides Aren't Lifting All Boats, Feb. 29, 2024
- Global Refinancing: Maturity Wall Looms Higher For Speculative-Grade Debt, Feb. 5, 2024
- Investment-Grade Check Q1 2024: Walking The Walk, Jan. 30, 2024
- Deutsche Lufthansa AG Upgraded To 'BBB-/A-3' On Strong Yields And Robust Air Travel Demand; Outlook Stable, Dec. 4, 2023
- British Airways PLC Upgraded To 'BBB-' From 'BB+' Following The Same Action On Parent IAG; Outlook Stable, Oct. 4, 2023
This report does not constitute a rating action.
| Primary Credit Analysts: | Vincent R Conti, Singapore + 65 6216 1188; vincent.conti@spglobal.com |
| Evan M Gunter, Montgomery + 1 (212) 438 6412; evan.gunter@spglobal.com | |
| Chiza B Vitta, Dallas + 1 (214) 765 5864; chiza.vitta@spglobal.com | |
| Barbara Castellano, Milan + 390272111253; barbara.castellano@spglobal.com | |
| Secondary Contacts: | Nick W Kraemer, FRM, New York + 1 (212) 438 1698; nick.kraemer@spglobal.com |
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| Research Assistant: | Nivritti Mishra, Mumbai |
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