Rising stars pipeline slows

The number of issuers likely to become ‘rising stars’ – the term used for issuers upgraded to investment grade from speculative grade – is slowing, according to data published by Standard & Poor’s today.

The rating agency says 29 of the global entities it rates have been classified as potential rising stars, compared with 33 this time last year.

And that number is likely to decrease further.

“Looking ahead, rising star activity should decelerate with the anticipated turn in the credit cycle,” says Diane Vazza, head of global fixed-income research at Standard & Poor's in New York.

In August S&P upgraded four issuers to investment-grade status. They were: Starwood Hotels & Resorts Worldwide in the US; US insurance company Ohio Casualty Corp; German cement producer HeidelbergCement; and Russian metals and mining group OJSC MMC Norilsk Nickel.

Meanwhile the number of fallen angels – the term used for issuers sinking into speculative grade from investment grade – is soaring. For the month to August 11, there were 32 fallen angels, up from 25 the previous month. Three of the latest ratings droppers were due to M&A activity, says S&P. It also identifies 42 entities as potential fallen angels, two more than the previous month.

“Fallen angels have overtaken rising stars by a margin of 11 entities in the year to date, a reversal of the pattern seen in 2004 and 2005," says Vazza.