Key Takeaways
- Tighter headroom for some 'BBB' issuers prompted a recent spike in fallen angels, but mounting macro pressures haven't slowed additions to the list of rising stars, with seven new issuers added in the first quarter and five in April.
- The risk of additional potential fallen angels is higher in the U.S. than in EMEA, while real estate and consumer products are the sectors to watch in both regions.
- We expect debt associated with U.S. and EMEA nonfinancial fallen angel downgrades will increase to $98 billion in the next year, up from $33.7 billion in the year to end-March 2023
After a quiet start to the year, S&P Global Ratings witnessed increased rating activity in recent months among investment-grade issuers, including a rise in both fallen angels (issuers downgraded to speculative-grade from investment-grade) and rising stars (issuers upgraded to investment-grade from speculative-grade). That trend continued through to the end of April.
The mix of activity reflects a changing economic environment, in which emerging macro pressures are weighing on some companies while strong demand continues to enable others to thrive. In developed economies the key shift has been a waning of post-pandemic demand, which has given way to wage and inflation pressures. Inflation has been compounded by the war in Ukraine, which has exacerbated periodic uncertainties around energy supply. Strong inflation has also led to rapid monetary policy tightening and market risk repricing.
Chart 1
We had noted in a prior report that 'BBB' issuers were entering this downturn from a position of relative stability (see "'BBB' Pulse: Five Things To Watch As Recession Risks Mount," Nov. 16, 2022). Nonetheless, the continued economic challenges have begun to chip away at the headroom for these ratings, and 'BBB' downgrade rates have begun to tick up (see chart 2).
Chart 2
There have been eight fallen angels so far in 2023 (through to the end of April), with seven of these downgrades occurring during a March spike that followed a lull in the first two months of the year. Six of the downgrades from March were in the U.S. and one in EMEA (see Table 4 in the appendix), which illustrates material regional divergence. Interestingly, only two of March's fallen angels were financial institutions, suggesting that the cause of the spike was more broad-based than banking sector stress during that month.
The number of fallen angels over the first four months of 2023 is notably lower than over the same period in 2022, yet a comparison of the periods is misleading. This is because 2022's 15 fallen angels includes 12 Russian financial, nonfinancial, and sovereign entities that were downgraded following the start of Russia's invasion of Ukraine.
The U.S. accounts for the bulk of fallen angels over 2023 (to the end of April), with representatives also from EMEA and Asia-Pacific. There has been little sectoral concentration, with financial institutions and homebuilder/real estate companies topping the count with a contribution of two fallen angels each.
Our economists continue to expect a shallow recession in the U.S. and a stagnation in the eurozone. That, coupled with higher rates and prolonged inflation, means we expect the amount of debt associated with U.S. and EMEA nonfinancial fallen angel downgrades will increase to $98 billion in the next 12 months, up from $33.7 billion in the 12 months to end-March 2023.
Some issuers continue to thrive, despite the mounting economic pressures, meaning that additions to the ranks of rising stars show no sign of slowing, with the addition of seven new rising stars over the first quarter bolstered by a further five in April. Despite that increase, the addition of 12 rising stars over the first four months of 2023 lags the performance over the same period of 2022, when 14 rising stars were added.
The tally of new rising stars this year has been underpinned by two key factors:
- The solid performance of the leisure and entertainment sector in the U.S. due to a rebound in travel that contributed to upgrades this year that made rising stars of Seminole Hard Rock Entertainment Inc and Seminole Hard Rock Entertainment LLC (and the upgrade of Hyatt Hotels Corp. in December).
- An increase in rising star upgrades in EMEA (four through to the end of April 2023, compared with two over the same period in 2022) that has encompassed a broad spectrum of sectors. Many of these upgrades came in April, due to diminished concerns surrounding high energy costs and strong demand that supported solid credit metrics.
Forward-Looking Ratings Trends Are Mixed, But Details Highlight Downgrade Risks
While investment-grade downgrades have begun to rise, forward-looking ratings trends suggest a more mixed picture, at least on the surface.
The number of nonfinancial potential fallen angels (PFA), which consist of issuers rated 'BBB-' with negative outlooks or CreditWatch negative placements, was down over the first four months of 2023 in both the U.S. and EMEA (see chart 3). Both regions have seven PFAs as of the end of April, though that tally declined more rapidly in EMEA since the start of 2023. The associated amount of debt at the PFAs was down to $104.7 billion as of the end of April, from $109.8 billion as of the end of 2022 (see chart 4).
Much of the decrease in PFA debt was due to fallen angel downgrades, which totaled $11.2 billion and outweighed the $10.2 billion of debt removed due to switches to positive or stable outlooks, from negative, and removals from CreditWatch placement. Additionally, $21.6 billion in new PFA debt has been added since end-2022. As such, underlying PFA debt trends suggest further downgrade risk in the 'BBB' space.
Chart 3
Chart 4
Looking at the different sectors included in the PFAs, commercial real estate's problems appear to be weighing heaviest on the home/real estate sector, which accounts for four PFAs, including three added in 2023 (see Table 3 in the appendix). Consumer products and aerospace and defense (A&D) are the next most represented sectors, with two PFAs each.
By outstanding debt amounts, A&D is the largest sector among PFAs, but this largely reflects one issuer--Boeing. Outside of A&D, consumer products has the largest debt amount associated with PFAs, at $19.7 billion, followed by home/real estate with $10.1 billion (see chart 5).
Chart 5
More broadly, negative bias among 'BBB' nonfinancials in the U.S. and EMEA was down one percentage point over the first four months of 2023, to 9% (see chart 6). While the overall trend is positive regional divergence is apparent , as the U.S. negative bias remains basically unchanged year-to-date, in contrast to EMEA, where has declined since February (see chart 7).
Chart 6
Chart 7
Meanwhile, at the cusp of investment-grade, the number of potential rising stars, which consist of issuers rated 'BB+' with positive outlooks or CreditWatch positive placements, has risen by three over 2023 (through to the end of April) to 32. The U.S., with 17 issuers, is more heavily represented among the potential rising stars than EMEA, which has 12. This reflects higher energy prices, which continue to benefit the U.S. energy sector, and resilient U.S. consumer demand. Sectors with the most potential rising stars include financial institutions (mostly European issuers), followed by the media and entertainment and the oil and gas sectors.
The Cost Of Becoming A Fallen Angel Is Rising
Amid rising rates and a looming economic slowdown, losing investment-grade status has become a key factor for cost of funding. The 22-day moving average of the difference in 'BB+' and 'BBB-' spreads is back at the August 2022 level of 63 basis points (bps), and is 39 bps above its most recent trough, in mid-November (see chart 8).
Chart 8
Among 'BBB's, corporate yields to maturity at issuance have climbed significantly along with benchmark government yields (see charts 9 and 10). Issuers in this rating category still have access to primary bond markets, but volumes have been inconsistent, leaving issuers looking for opportunistic windows of relative market stability to come to market.
For example, in the last three quarters of 2022, issuance volumes by nonfinancial U.S. 'BBB' names fell to their lowest levels since 2018. In EMEA, Q2 and Q3 volumes were the lowest since 2018. A window opened in early 2023, resulting in higher Q1 volumes in both regions. That opportunity was driven by market expectation of an earlier pivot by major central banks, and especially by the U.S. Federal Reserve (Fed). However, issuance volumes were off to a slower start in the second quarter as concerns about the banking sector, and shifting views on the timing of an eventual Fed pivot, added to uncertainty, highlighting how shifts in market sentiment can impact primary bond markets' issuance.
Chart 9
Chart 10
Risks from market pricing and, particularly, market access are far more acute for speculative-grade issuers and, despite a window of opportunity for issuance in Q1 2023, speculative-grade volumes remained much lower than for 'BBB'. Volumes were especially challenged during the last three quarters of 2022, when issuer access to primary bond markets fell considerably as investors proved increasingly selective and demanded much higher risk premia for lower-rated borrowers (see charts 11 and 12). Even as of end-Q1 2023, average yield to maturity at issuance for speculative-grade was about 300 bps higher than their 'BBB' category counterparts. Average yields for new speculative-grade issues climbed to almost 10% at the peak of market selectivity, towards the end of 2022.
Chart 11
Chart 12
Given fallen angels' limited market access, the cost of becoming a fallen angel could be far higher than simply the difference in spreads between 'BB+' and 'BBB-'. Further, we expect both the Fed and the European Central Bank (ECB) to keep policy rates higher for longer than the market expects, which could keep corporate yields elevated. In addition, yields risk being pushed higher and investors could become even more selective if there are further periods of market turmoil.
These considerations also underpin refinancing risks for speculative-grade issuers, and those who might be downgraded into speculative-grade. As of the beginning of 2023, just over $320 billion in 'BBB' category bonds from nonfinancial corporates in the U.S. and EMEA were scheduled to mature during the year. Maturities rise to a peak of almost $450 billion in 2025, a 39% increase over 2023's level (see chart 13).
While these maturity demands appear considerable, the pace of 'BBB' bond issuance in the first quarter of 2023 was sufficient to keep issuers on track to meet annual maturities through 2025, so long as the pace is maintained. The road ahead could, however, prove tougher for fallen angels if financing conditions remain rocky, as evidenced by the more pronounced challenges faced by speculative-grade issuers in the primary market over the past year.
Chart 13
Commercial Real Estate And Consumer Products Are Key Sectors To Watch
Despite the generally increasing risk of downgrades into speculative-grade, risks are not evenly distributed, either by sector or region.
U.S.
The U.S. has experienced an uptick in negative bias for 'BBB' issuers. It was home to three of the nine new potential fallen angels, and six of the eight new fallen angels, over the first four months of 2023.
Markets have been skittish due to higher interest rates, continued inflation, and expectations of a recession. Additionally, late Q1 2023 was characterized by vulnerabilities in the financial sector, as regional banks sustained significant deposit outflows. This has stoked fears of wider contagion which might weigh on the broader economy. Swift regulatory actions have helped curtail financial stability risks, at least in the short term, and at this juncture we believe that particular risk is contained.
Nonetheless, the decline of the office commercial real estate sector is of particular concern, due to its potential to exacerbate pressures on regional U.S. banks. The fallen angel, Office Properties Income Trust (OPI), has been the most adversely affected so far by the challenges in commercial real estate, and the rating was lowered two notches based on quality of its assets and upcoming lease maturities. Shortly after the rating was lowered, OPI entered into an agreement to acquire Diversified Healthcare Trust, which we believe will weaken its credit quality further, as reflected in the rating's placement on CreditWatch negative.
Separately, the consumer products sector remains embattled. Newell Brands, another of March's fallen angels, has struggled with the rising costs of maintaining a nimble supply chain as inflation contributes to shifts in customer preferences. The consumer products sector is also featured heavily among the nine U.S. potential fallen angels, along with homebuilders (where higher interest rates have weighed on demand in end markets ) and A&D (where supply chain issues continue to cause woes).
EMEA
In contrast to the U.S., EMEA saw a dip in negative bias among 'BBB's and the number of potential fallen angels fell by four over the first four months of 2023, mainly due to the revision of outlooks to stable. Many investment-grade European companies have so far proven resilient to the worsening external conditions. The negative effects of the Russia-Ukraine conflict have been managed better than anticipated, especially the impact of gas shortages. And, due to the prevailing uncertainty, many companies have maintained discipline in remuneration and acquisitions.
Nonetheless, in 2023, the persistence of inflation and higher funding costs are negative factors that justify some cautiousness in the guidance provided by many companies. We reflect this in our forecasts, and we believe that for a majority of the investment-grade companies, some softening in the credit metrics can be accommodated in the current ratings. However, in the lower end of investment-grade, companies with limited rating headroom, large amounts of debt, and significant refinancing needs over the next two years are exposed to greater pressure on ratings than the rest of the Investment-grade universe. This could add to the number of potential fallen angels in the coming months.
As in the U.S., we consider the commercial real estate sector (especially in non-prime locations) to be a key concern due to a combination of tighter financing conditions, significant refinancing needs in 2024 and 2025 for some companies, and declining asset values from higher interest rates. Also many companies have been active consolidators in the industry and thus have significant amounts of financial debt.
Crucially, 60% of rated real estate companies in EMEA are in the 'BB' category, while 20% of all rated real estate entities have a negative outlook. Real estate is already exhibiting fallen angel risk this year in EMEA, with the downgrade to speculative-grade of Globalworth Real Estate Investments (in March) and Samhallsbyggnadsbolaget I Norden AB (in May). PFAs include D.V.I. Deutsche Vermogens- und Immobilienverwaltungs GmbH.
EMEA has also witnessed a notable increase in the number of rising stars this year. That has been supported for some by solid demand that has driven strong results and for others by prudent financial policies adopted in response to the energy crisis. The resultant solid credit metrics often appear sustainable, even within the current sluggish economic scenario and energy price volatility. Finally, a few sectors are supported by mega trends, such as energy transition, that are going to last for years to come. Beneficiaries of those trends include Finnish nuclear power producer Teollisuuden Voima, which became a rising star in April, and French nuclear industry service provider Orano S.A., which became a rising star last year.
Economic Slowdown Could Push Fallen Angel Estimates Higher
In the 12 months to March 31, 2023, fallen angel activity was relatively benign for nonfinancial corporates. In the U.S. and EMEA, fallen angel volume totaled $33.7 billion for the 12 months to the end of March 2023, which was lower than the annual totals in 13 of the past 15 years. We expect the amount of debt associated with fallen angel downgrades will increase over the 12 months to the end of March 2024, rising to about $98 billion for nonfinancial corporates in the U.S. and EMEA. While that would mark a nearly three-fold increase in fallen angel activity, compared to the previous year, it would still only return volumes to near the average annual level of the past 15 years. Our estimated volume for the year to March 2024 would also fall just below the full-year 2022 amount, when nonfinancial fallen angels included 10 Russian nonfinancial issuers that were downgraded and withdrawn due to regulatory requirements, along with the sovereign (following Russia's invasion of Ukraine). Our estimate for the year to March 2024, suggests fallen angel downgrades would affect 1.7% of 'BBB' debt.
For the U.S., we estimate that nonfinancial corporate fallen angel downgrades will affect $68.9 billion of debt, or 1.9% of 'BBB' debt. In EMEA, we estimate downgrades will affect $29.1 billion, or 1.4% of 'BBB' debt (see table 1).
Our estimate of U.S. fallen angel debt as a share of 'BBB' debt remains largely unchanged from our prior estimate, in September, despite our forecast of a short recession in the U.S. However, in EMEA, the estimate has declined as a share of the 'BBB' category debt. That is because the negative bias for 'BBB's in EMEA has fallen as it became evident that for companies the impact of the war in Ukraine was less than feared in some more-pessimistic scenarios.
Table 1
| Fallen angel estimates: April 1, 2023 to March 31, 2024 | ||||||
|---|---|---|---|---|---|---|
| Region | Fallen angel estimate (bil. $) | Fallen angel estimate (%) | ||||
| U.S. + EMEA | 98.0 | 1.7 | ||||
| EMEA | 29.1 | 1.4 | ||||
| U.S. | 68.9 | 1.9 | ||||
| Data as of April 1, 2023. Includes only nonfinancial fallen angel projections from April 1, 2023 to March 31, 2024. Source: S&P Global Ratings Credit Research & Insights. | ||||||
Appendix
Hypothetical fallen angel downgrade estimate analysis approach
This hypothetical scenario analysis is used 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 March 2023 (see table 2).
Table 2
| Hypothetical fallen angel scenario risk weights | ||||||||
|---|---|---|---|---|---|---|---|---|
| (%) | --Scenario weights-- | |||||||
| Outlook/CreditWatch | 'BBB+' | 'BBB' | 'BBB-' | |||||
| Positive outlook or CreditWatch | 0.00 | 0.00 | 0.00 | |||||
| Stable outlook | 0.21 | 0.82 | 4.25 | |||||
| Negative outlook | 1.00 | 5.00 | 20.00 | |||||
| Negative CreditWatch | 3.00 | 15.00 | 50.00 | |||||
| Average rate downgraded to speculative-grade over a 12-month horizon (April 2012-March 2023) (%) | 0.32 | 1.66 | 8.04 | |||||
| Data as of March 31, 2023. Sources S&P Global Ratings and S&P Global Ratings Credit Research & Insights. | ||||||||
The risk weights applied to the negative and positive outlooks and CreditWatch statuses represent estimates for fallen angel potential given 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 2012, 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.
Chart 14
Chart 15
Chart 16
Table 3
| Potential fallen angels | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 'BBB-' rated issuers with Negative outlooks or on CreditWatch with Negative implications | ||||||||||
| Sector/subsector | Issuer | CreditWatch negative/negative outlook | Country | Debt amount (mil. $) | ||||||
| Utilities | Adani Electricity Mumbai Ltd. | Negative | India | 1,000 | ||||||
| Transportation | Adani Ports and Special Economic Zone Ltd. | Negative | India | 4,200 | ||||||
| Financial institutions | AmFam Holdings Inc. | Negative | U.S. | 1,000 | ||||||
| Financial institutions | Argo Group International Holdings Ltd. | Watch Neg | U.S. | 275 | ||||||
| Aerospace and defense | Boeing Co. | Negative | U.S. | 55,798 | ||||||
| Homebuilders/real estate companies | Brandywine Realty Trust Inc. | Negative | U.S. | 1,500 | ||||||
| Financial institutions | China Bohai Bank Co. Ltd. | Negative | China | 300 | ||||||
| Financial institutions | CI Financial Corp. | Negative | Canada | 2,634 | ||||||
| Consumer products | Conagra Brands Inc. | Negative | U.S. | 10,283 | ||||||
| Homebuilders/real estate companies | D.V.I. Deutsche Vermogens- und Immobilienverwaltungs GmbH | Negative | Germany | 386 | ||||||
| Telecommunications | Eutelsat Communications S.A. | Watch Neg | France | 3,090 | ||||||
| Financial institutions | Far East Horizon Ltd. | Negative | Hong Kong | 1,317 | ||||||
| Health care | Fresenius Medical Care AG & Co. KGaA | Negative | Germany | 8,090 | ||||||
| Homebuilders/real estate companies | GLP Pte. Ltd. | Negative | Singapore | 3,857 | ||||||
| Transportation | GXO Logistics Inc. | Negative | U.S. | 800 | ||||||
| Aerospace and defense | Huntington Ingalls Industries Inc. | Negative | U.S. | 2,150 | ||||||
| Utilities | Inter Pipeline Ltd. | Negative | Canada | 5,198 | ||||||
| Financial institutions | Intercorp Financial Services Inc. | Negative | Peru | 1,300 | ||||||
| Consumer products | International Flavors & Fragrances Inc. | Negative | U.S. | 9,385 | ||||||
| Media and entertainment | JCDecaux SE | Negative | France | 4,193 | ||||||
| Media and entertainment | Jinjiang International Holding Co. Ltd. | Negative | China | 552 | ||||||
| Capital goods | KION Group AG | Negative | Germany | 552 | ||||||
| Utilities | Nova Scotia Power Inc. | Negative | Canada | 2,426 | ||||||
| Transportation | One Rail Australia Holdings Ltd. | Watch Neg | Australia | 407 | ||||||
| Telecommunications | Rogers Communications Inc. | Negative | Canada | 27,496 | ||||||
| Homebuilders/real estate companies | Samhallsbyggnadsbolaget i Norden AB (publ) | Negative | Sweden | 5,959 | ||||||
| High technology | SK Hynix Inc. | Negative | Korea | 5,500 | ||||||
| Oil and gas | SK Innovation Co. Ltd. | Watch Neg | Korea | 500 | ||||||
| Utilities | South Staffordshire PLC | Negative | U.K. | 288 | ||||||
| Financial institutions | Tanner Servicios Financieros S.A. | Negative | Chile | 140 | ||||||
| Homebuilders/real estate companies | Vornado Realty Trust | Negative | U.S. | 2,250 | ||||||
| Automotive | Zhejiang Geely Holding Group Co. Ltd. | Negative | China | 2,717 | ||||||
| Data as of April 30, 2023. 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 2023 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| One new fallen angel in April | ||||||||||||||
| Date | Issuer | To | From | Sector/subsector | Country | Rated debt affected (mil. $) | ||||||||
| 3/7/2023 | Nissan Motor Co. Ltd. | BB+ | BBB- | Automotive | Japan | 14,769 | ||||||||
| 3/10/2023 | SVB Financial Group | CC | BBB- | Financial institutions | U.S. | 6,000 | ||||||||
| 3/15/2023 | First Republic Bank | BB+ | A- | Financial institutions | U.S. | 5,150 | ||||||||
| 3/20/2023 | Newell Brands Inc. | BB+ | BBB- | Consumer products | U.S. | 6,560 | ||||||||
| 3/22/2023 | Globalworth Real Estate Investments Ltd. | BB+ | BBB- | Homebuilders/real estate co. | Guernsey | 429 | ||||||||
| 3/31/2023 | Crane Holdings Co., | BB+ | BBB | High technology | U.S. | 1,200 | ||||||||
| 3/31/2023 | Office Properties Income Trust | BB | BBB- | Homebuilders/real estate co. | U.S. | 2,500 | ||||||||
| 4/3/2023 | Fluor Corp. | BB+ | BBB- | Capital goods | U.S. | 1,100 | ||||||||
| Data as of April 30, 2023. 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 (MTN), 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
| Potential rising stars | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 'BB+' rated issuers with Positive outlooks or on CreditWatch with Positive implications | ||||||||||
| Subsector | Issuer | CreditWatch positive/Positive outlook | Country | Debt amount (mil. $) | ||||||
| Media and entertainment | Accor S.A. | Positive | France | 4,745 | ||||||
| Metals, mining, and steel | Alcoa Corp. | Positive | U.S. | 3,000 | ||||||
| Oil and gas | Antero Resources Corp. | Positive | U.S. | 8,300 | ||||||
| Oil and gas | Apache Corp. | Positive | U.S. | 9,430 | ||||||
| Media and entertainment | Aristocrat Leisure Ltd. | Positive | Australia | 3,799 | ||||||
| Financial institutions | Banco Comercial Portugues S.A. | Positive | Portugal | 1,302 | ||||||
| Telecommunications | Cellnex Telecom S.A. | Positive | Spain | 11,414 | ||||||
| Media and entertainment | CoStar Group Inc. | Positive | U.S. | 1,000 | ||||||
| Transportation | Deutsche Lufthansa AG | Positive | Germany | 6,731 | ||||||
| Consumer products | Elis S.A. | Positive | France | 2,041 | ||||||
| Utilities | Empresa Nacional del Petroleo | Positive | Chile | 2,540 | ||||||
| Oil and gas | Endeavor Energy Resources L.P | Positive | U.S. | 2,000 | ||||||
| Utilities | Enlink Midstream, LLC | Positive | U.S. | 6,193 | ||||||
| Automotive | Ford Motor Co. | Positive | U.S. | 114,384 | ||||||
| Metals, mining, and steel | Freeport-McMoRan Inc. | Positive | U.S. | 7,462 | ||||||
| Aerospace and defense | Hexcel Corp. | Positive | U.S. | 700 | ||||||
| Media and entertainment | Host Hotels & Resorts Inc. | Positive | U.S. | 4,150 | ||||||
| Aerospace and defense | Howmet Aerospace Inc. | Positive | U.S. | 6,005 | ||||||
| Consumer products | ICON PLC | Positive | Ireland | 6,015 | ||||||
| Chemicals, packaging, and environmental services | K+S Aktiengesellschaft | Positive | Germany | 662 | ||||||
| Aerospace and defense | Leonardo S.p.a. | Positive | Italy | 1,766 | ||||||
| Financial institutions | MTB Magyar Takarekszovetkezeti Bank Zrt. | Positive | Hungary | 1,088 | ||||||
| Metals, mining, and steel | Minsur S.A. | Positive | Peru | 500 | ||||||
| Financial institutions | Newmark Group, Inc. | Positive | U.S. | 550 | ||||||
| Capital goods | Nexans S.A. | Positive | France | 1,021 | ||||||
| Financial institutions | Nexi SpA | Positive | Italy | 3,669 | ||||||
| Chemicals, packaging, and environmental services | Olin Corp. | Positive | U.S. | 2,150 | ||||||
| Transportation | RXO, Inc. | Positive | U.S. | 355 | ||||||
| Financial institutions | Sagicor Financial Company Ltd. | Positive | Bermuda | 400 | ||||||
| Oil and gas | Southwestern Energy Co. | Positive | U.S. | 4,200 | ||||||
| Homebuilders/real estate companies | Toll Brothers Inc. | Positive | U.S. | 1,600 | ||||||
| Chemicals, packaging, and environmental services | Verallia S.A. | Positive | France | 1,104 | ||||||
| Data as of April 30, 2023. 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 2023 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Five new rising stars in April | ||||||||||||||
| Date | Issuer | To | From | Sector/subsector | Country | Rated debt affected (mil. $) | ||||||||
| 1/17/2023 | Booz Allen Hamilton Inc. | BBB- | BB+ | Aerospace and defense | U.S. | 3,368 | ||||||||
| 2/7/2023 | Nokia Corp. | BBB- | BB+ | High technology | Finland | 3,712 | ||||||||
| 2/23/2023 | MSCI Inc. | BBB- | BB+ | High technology | U.S. | 4,550 | ||||||||
| 3/9/2023 | Pilot Travel Centers LLC | BBB+ | BB+ | Retail/restaurants | U.S. | 8,000 | ||||||||
| 3/13/2023 | Seminole Hard Rock Entertainment Inc. (Seminole Tribe of Florida) | BBB- | B+ | Media and entertainment | U.S. | 1,140 | ||||||||
| 3/13/2023 | Seminole Hard Rock International LLC (Seminole Tribe of Florida) | BBB- | B+ | Media and entertainment | U.S. | 1,140 | ||||||||
| 3/21/2023 | Ingersoll Rand Inc. | BBB- | BB+ | Capital goods | U.S. | 5,768 | ||||||||
| 4/3/2023 | The Weir Group PLC | BBB- | BB+ | Capital goods | U.K. | 800 | ||||||||
| 4/3/2023 | Belron Group S.A. | BBB- | BB+ | Media and entertainment | Luxembourg | 4,540 | ||||||||
| 4/5/2023 | LPL Holdings, Inc. | BBB- | BB+ | Financial Institutions | U.S. | 3,670 | ||||||||
| 4/26/2023 | Teollisuuden Voima Oyj | BBB- | BB+ | Utilities | Finland | 3,464 | ||||||||
| 4/27/2023 | Mattel Inc. | BBB- | BB+ | Media and entertainment | U.S. | 2,350 | ||||||||
| Data as of April 30, 2023. 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 (MTN), 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. | ||||||||||||||
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- This Month In Credit: Credit Strains Expose Pockets Of Weakness, March 28, 2023
- Economic Outlook U.S. Q2 2023: Still Resilient, Downside Risks Rise, March 27, 2023
- Economic Outlook Eurozone Q2 2023: Rate Rises Weigh On Return To Growth, March 27, 2023
- Romania-based Globalworth Real Estate Investments Ltd. Downgraded To 'BB+' On Sustained High Leverage; Outlook Stable, March 22, 2023
- Newell Brands Inc. Downgraded To 'BB+' From 'BBB-' On Lower Earnings And Cash Flow, Outlook Negative, March 20, 2023
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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 | |
| Barbara Castellano, Milan + 390272111253; barbara.castellano@spglobal.com | |
| Chiza B Vitta, Dallas + 1 (214) 765 5864; chiza.vitta@spglobal.com | |
| Secondary Contacts: | Nick W Kraemer, FRM, New York + 1 (212) 438 1698; nick.kraemer@spglobal.com |
| Patrick Drury Byrne, Dublin (00353) 1 568 0605; patrick.drurybyrne@spglobal.com |
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