Morningstar Publishes List of Corporate Bonds to Avoid

Wed Feb 20, 2013 12:00pm EST

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CHICAGO,  Feb. 20, 2013  /PRNewswire/ -- Morningstar, Inc. (NASDAQ: MORN), a
leading provider of independent investment research, today published its
quarterly list of "Bonds to Avoid," including analyst commentary about corporate

Morningstar's Bonds to Avoid list represents the debt of companies that its
analysts believe are unattractive, based on Morningstar's corporate credit
rating and other factors including event risk, such as an impending acquisition,
special dividends, or share repurchases; deteriorating fundamentals, including
those driving a negative Morningstar Moat Trend  Rating; poor management; or a
poor Distance to Default score.

Companies on the list of 18 corporate credits include:

* Walgreen, Morningstar Corporate Credit Rating BBB
Morningstar doesn't believe the bond market is adequately pricing in the risks
associated with Walgreen's option to purchase the rest of Alliance Boots, which
could significantly lever up the balance sheet, or the firm's weakening position
in the drug supply chain, which is highlighted by its negative Economic Moat
Trend rating.  
* Directv, Morningstar Corporate Credit Rating BBB
Morningstar believes that management's consistent adherence to a leverage target
of 2.5 times EBITDA and the potential for change in the television business over
the next several years could cause cash flow and credit metrics to deteriorate,
pulling spreads wider still.  
* Pitney Bowes, Morningstar Corporate Credit Rating BBB-
In late 2011, Morningstar downgraded its credit rating on Pitney Bowes to BBB-
following its decision to lower the Economic Moat rating on the company from
Narrow to None, and believes that continued investments in Pitney's no-moat
business lines may further dilute the company's remaining competitive advantages
over time, leading to steadily declining credit fundamentals.

"Our list includes companies in continually declining industries with eroding
moats, or competitive advantages, such as Pitney Bowes, to names in which we see
meaningful event risk, like Walgreen," said  Rick Tauber, Morningstar's director
of corporate bond research. "We aim to offer investors an objective assessment
of a company's financial health through a unique perspective as our analysts
evaluate companies across the credit spectrum. Our list highlights companies
that present excessive risk for which we believe investors are not appropriately

The company updates its Bonds to Avoid list and commentary quarterly.
Morningstar began publishing a list of Bonds to Avoid for corporate credit in 
August 2012. Morningstar's corporate credit analysts also publish their "Best
Ideas" across investment grade, high-yield, and convertible bonds monthly, in
addition to new issue notes, credit notes related to earnings and other news,
and sector reports across their coverage universe.  

Morningstar has about 120 global equity and credit analysts who cover
approximately 1,700 companies; 700 of those companies have a corporate credit
rating. The company launched corporate credit ratings in 2009, and assigns the
ratings on a letter scale from AAA, which indicates extremely low default risk,
to D, which indicates payment default.

Morningstar's corporate credit ratings are available on, the
company's individual investor website. More information about Morningstar's
corporate credit research offerings and methodologies are available at The
complete list of 18 Bonds to Avoid in corporate credit is available through
Morningstar Select, the company's institutional equity research portal. For
access, institutional investors may contact  

About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment research in 
North America,  Europe,  Australia, and  Asia. The company offers an extensive
line of products and services for individuals, financial advisors, and
institutions. Morningstar provides data on approximately 416,000 investment
offerings, including stocks, mutual funds, and similar vehicles, along with
real-time global market data on more than 9 million equities, indexes, futures,
options, commodities, and precious metals, in addition to foreign exchange and
Treasury markets. Morningstar also offers investment management services through
its registered investment advisor subsidiaries and has approximately  $149
billion  in assets under advisement and management as of  Dec. 31, 2012. The
company has operations in 27 countries.

Morningstar's corporate credit ratings are assigned by equity and credit
analysts at Morningstar, Inc., which is not registered as a Nationally
Recognized Statistical Rating Organization (NRSRO).  Opinions expressed above
are subject to change and should not be considered a guarantee or a solicitation
to buy or sell securities of any of the above issuers.

©2013 Morningstar, Inc.  All rights reserved.


Media Contact:
Nadine Youssef, +1 312-696-6601 or

SOURCE  Morningstar, Inc.

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