S&P : Bond Upgrade Potential In Emerging And Developed Markets, Including The U.S. And Europe: The Total Increases For The Sixth Consecutive Month

The number of entities poised for upgrades has increased for the sixth consecutive month, rising to 295 as of May 30, 2014, from 278 a month earlier. The gap between the potential upgrades and potential downgrades narrowed in May because the number of potential downgrades declined significantly, to 502 from 530, while the number of potential upgrades increased to 295 from 278. Moreover, the forest products and building materials, transportation, and homebuilders and real estate companies sectors all show higher upgrade potential than they have historically. We define potential upgrades as issuers that Standard & Poor’s Ratings Services rates ‘AA+’ to ‘B-‘ with either positive rating outlooks or ratings on CreditWatch with positive implications. We closely monitor potential upgrades as these companies are the most likely to be upgraded in the short-to-medium term, and their aggregate number points to the direction of potential rating changes. Ongoing surveillance of these issuers can be valuable to investors in their sector credit allocation process.

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