NEW YORK, February 25, 2021 / PRNewswire / – The downgrade potential increased in the oil and gas sector in January due to a revised industry risk assessment issued on January 25. This was due to environmental, social and governmental factors (ESG), as many governments formally endorse the adoption and transition to renewable energy alternatives. Specifically, this caused nine issuers on our list to be placed on CreditWatch with negative implications, temporarily increasing the downgrade pressure, which has largely decreased since then.
Although still considerably larger than 642 issuers a year ago, overall downgrades to potential bonds dropped to 1,137 at the end of January, from 1,178 a month earlier, said S&P Global Ratings Research in an article published today, “ESG Concerns In Oil And Gas Sectors Led to an increase in relegation pressure in January, which was noticed in mid-February. “
“Although we saw a jump in downgrade pressure for the oil and gas sector in January, the broader trend of a downturn in potential bond downgrades continued for the sixth consecutive month,” said Sudeep Kesh, head of S&P Global Credit Markets Research . “Six of CreditWatch’s nine placements were resolved through downgrades to the issuer’s credit rating, one remains to be resolved and two have been removed with a rating statement.”
So far, in 2021, financial institutions continue to lead potential downgrade of securities in 158, followed by the media and entertainment sector in 135 issuers, together accounting for more than 25% of potential downgrade of securities. The risk of downgrade continues to decrease in both sectors, as we anticipate a slowdown in the pace of downgrades this year, although it remains high.
Potential downgrades are issuers rated ‘AAA’ to ‘B-‘ by S&P Global Ratings with negative rating prospects or ratings on CreditWatch with negative implications.
This report is not a classification action.
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