TEXT-S&P report on U.S. personal care, consumer services

Fri Apr 27, 2012 2:57pm EDT

(The following statement was released by the rating agency)

April 27 - With U.S. economic growth remaining subdued, Standard & Poor's Ratings Services' outlook for the credit quality of U.S. consumer products companies in the personal care, consumer services, apparel, and tobacco sectors is slightly negative in 2012.

"We see rating stability for the majority of the investment-grade companies in these sectors, but believe that some speculative-grade companies may have difficulty turning their operating performance around, while others may have difficulty refinancing," said Standard & Poor's credit analyst Diane Shand, in a report published today. "Although, we have stable outlooks on 76% of the issuers in these sectors, we believe downgrades will outpace upgrades for all of 2012," added Ms. Shand. According to the report, titled "Slow Recovery And Elevated Costs Could Mean Downgrades Outpace Upgrades In 2012 For U.S. Personal Care, Consumer Services, Apparel, And Tobacco Companies," Standard & Poor's believes inflation will be more moderate in 2012 than 2011. Our 2012 baseline forecast calls for continued slow economic growth, which will enable some companies in the personal care, consumer services, apparel, and tobacco sectors to modestly improve profits "This should support continued credit stability for the majority of companies in these sectors," said Ms. Shand. "Thus, we believe we will be revising some of the rating outlooks to stable from negative, and that the downgrade-to-upgrade ratio in 2012 could be slightly better than in 2011." (Caryn Trokie, New York Ratings Unit)

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