In 2004, the number of rising stars exceeded the number of fallen angels - those corporates to fall from investment grade to junk status - for only the second time since 1998. A total of 43 rising stars were recorded globally in 2004, affecting rated debt worth $58.2 billion. The volume of debt affected by these actions is a record high even though the count of rising stars remains below the historical peak of 55 in 1997.
"Looking ahead, the incidence of rising stars will likely decelerate from the record pace set in 2004, unless a wave of mergers and acquisitions results in a fresh round of upgrades," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. According to S&P's, a lengthy term of favourable conditions in the global bond markets is ending, with the markets poised at a cusp. Corporate bonds are now expensive, and investors will be challenged in their attempt to match the returns posted in prior years.