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S&P: US Distress Ratio Sinks to 6.8%, a 32-Month Low

The U.S. distress ratio has continued its downward trend and now stands at 6.8% as of May 15, 2017, from 7% as of April 17.

US distress ratio

This is its lowest level since September 2014 when the ratio stood at 5%, and marks a steady decline from its February 2016 peak when it reached 34%, according to S&P Global Ratings Fixed Income Research.

This decline reflects somewhat stabilized commodity pricing pressure but belies an increase in the distress ratio of the retail and restaurants sector, which now has a commanding lead of 20.6% with 21 distressed issues.

The ratio measures speculative-grade issues with option-adjusted composite spreads of more than 1,000 basis points relative to U.S. Treasuries, and indicates the level of risk the market has priced into its bonds.

By sector, retail and restaurants is followed by the oil-and-gas sector, which had the second-highest ratio at 10.6%. — Rachelle Kakouris

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This story is taken from analysis which first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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