Low Eurobond issuance through 2004, the trend towards speculative grade paper and increasing debt:EBITDA ratios in the leveraged loan market all indicate that spreads may have to widen in the future. Lower ratings are being driven by the addition of newer ratings for smaller companies in Western Europe and the increase in lower rated debt in general. Despite some optimistic indicators for the rest of 2005 Standard & Poor’s is not bullish about the credit markets and does not expect sustained credit quality improvements.
