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TEXT-S&P:Most banks that are at risk of downgrades are based in Europe
(The following statement was released by the rating agency)
March 8 - Banks led all sectors in potential bond downgrades at the end of February as a result of Standard & Poor's Ratings Services' rating actions on European sovereigns and eurozone banks. According to an article published today by Standard & Poor's Global Fixed Income Research, titled "Bond Downgrade Potential In Emerging And Developed Markets, Including The U.S. And Europe: Banks Continue To Face Potential Downgrades," as of Feb. 29, 483 entities were most at risk of downgrades--down from 487 on Jan. 31.
Banks comprise 15% of the potential downgrade list, followed by utilities at 10% and media and entertainment at 7%. Potential downgrades are entities that have either negative outlooks or ratings on CreditWatch with negative implications across rating categories 'AAA' to 'B-'. A majority of these banks are based in Europe. "Since our last report, we removed 39 entities from the potential downgrades list, and we added 35," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "Of the issuers we added, 18 are based in the U.S. and seven are based in Europe." Of the 73 issuers in the banking sector on the potential downgrades list, 46 (63%) are based in Europe and 13 (18%) are based in the U.S., which includes Bermuda and the Cayman Islands.
Standard & Poor's Ratings Services downgraded 60 entities that were on the potential downgrades list last month--many of which were European banks affected by ratings actions on European sovereigns. "Sectors showing the greatest downgrade risk compared with their average negative biases are sovereigns, banks, and insurance," said Ms. Vazza. Negative bias is the proportion of issuers with negative outlooks or ratings on CreditWatch with negative implications. (Caryn Trokie, New York Ratings Unit)
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