Potential fallen angels in Europe far outnumber aspiring rising stars despite the strong credit environment, in a counterintuitive trend. Moody's Investors Service has eight Baa3-rated companies on review for downgrade or with a negative outlook, compared to only three Ba1-rated issuers on review for upgrade or with a positive outlook, according to Guillaume Menuet, senior economist at Moody's in London.
The figures contradict the broader, positive credit environment, although because the number of potential fallen angels remains low and spread across sectors, it suggests credit problems are company-specific. FKI and Cemex Finance Europe are both on review, while J Sainsbury, The Rank Group, CE Electric U.K. Funding Company, Perent Funding, Western Power Distribution Holdings and two subsidiaries each of Basell and HHG, are all on negative watch.
If all are downgraded, it would reverse the trend of the past few years. Last year saw only two companies drop to sub-investment grade, down sharply from 13 in 2003 and a whopping 20 in 2002.
On the rising star side, Adecco, Alfa Laval Special Finance and MG Technologies are all pegged as potential candidates by Moody's.
