The S&P downgrade ratio in Europe - 4:1 More euro gloom. From S&P "s Global Fixed Income research team on Tuesday, "Europe's Sovereign Crisis Continues To Erode Credit Quality." As of September 2012, the 12-month-trailing European corporate speculative-grade default rate was 2.3%, compared with 1.6% as of year-end 2011, 1.0% in 2010, and 7.9% in 2009. While relatively few companies defaulted on their obligations so far in 2012, the degradation in credit quality was still significant. In the first three quarters of the year, there were about four downgrades for every upgrade among financial and nonfinancial companies, compared with a ratio of about two to one in the previous two years. The increase in downgrades, combined with new ratings in the lower rating categories, has altered the overall ratings mix in Europe. Nearly 30% of all ratings were in the speculative-grade segment ("BB+" rating and lower) as of September 2012-a significant jump from just 17% as of year-end of 2007 (prior to the start of the global financial crisis). Historically, not only are speculative-grade entities more volatile than their investment-grade counterparts, but the default occurrence is also higher. That said, new corporate bond issuance has picked up markedly this year, with $784bn in the first three quarters of 2012 - the strongest flow since 2009, when governments were busy underwriting bond issues to prop up banks. Click to enlarge... Still, the S&P team are nervous. Some $1 trillion of debt from European companies will mature in 2013, and then another $1.3 trillion in 2014 - a large chunk of this in the financial sector...