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S&P: Potential bond downgrades rise in July as demand weighs on auto sector

The number of potential downgrades on global bonds rated AAA to B- by S&P Global Ratings rose to 572 as of July from 551 a month ago, led mainly by the automotive sector.

The July tally of potential downgrades, or issuers with negative outlooks or with ratings on CreditWatch with negative implications, is "significantly higher" than the 522 recorded in the year-ago period, S&P Global Ratings said.

Year over year, potential bond downgrades in the automotive sector increased by 16, primarily because of a slowdown in consumer demand due to ongoing geopolitical tensions, according to the report. Ten of the potential new downgrades are for auto parts manufacturers in either the U.S. or Europe.

The automotive sector also leads in negative bias, or the proportion of issuers with negative outlooks or ratings on CreditWatch with negative implications, at 27.1% as of July 31, up from 13.5% a year ago. Aerospace and defense, consumer products, retail and restaurants follow with negative biases of 24.19%, 23.92% and 23.53%, respectively.