S&P says potential fallen angels at highest level in two years

By Angela McDaniels

Tacoma, Wash., Feb. 15 - Standard & Poor's lists 44 entities with rated debt totaling $131.3 billion as potential fallen angels, according to an agency news release.

The agency said this tally is now higher than the annual average counts of potential fallen angels of 39 and 43 recorded in 2007 and 2006, respectively.

Potential fallen angels are entities rated BBB- with either a negative outlook or with ratings on CreditWatch with negative implications.

"Homebuilders and real estate companies are among the lead sectors most vulnerable to crossing the investment grade/speculative grade divide," Diane Vazza, head of S&P's global fixed-income research group, said in the release.

"Other sectors with a high count of potential fallen angels are forest products and building materials and utilities."

By debt volume, the agency said the lineup among potential fallen angels is finance, telecommunications, utilities, homebuilding and real estate, forest products and building materials, and media and entertainment.

Only one fallen angel, Norbord Inc., has been recorded in the year to date, affecting rated debt worth $637 million. In the corresponding period a year ago, three fallen angels had been recorded out of an annual total of 42, according to the release.

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