"The global fallen angel rate fell to 0.1% in the third quarter from 1.3% in the second," says Albert Metz, Managing Director of Moody's Credit Policy Research. "While 26 European banks were downgraded from investment to speculative grade in the second quarter, during the third there were just two fallen angels, Italian insurer Unipol Gruppo Finanziario and US building materials manufacturer Martin Marietta Materials."

Among the companies Moody's upgraded during the third quarter, 15 saw their ratings climb from speculative grade to investment grade, compared with 11 in the previous quarter. Of the third quarter's "rising stars," seven were based in North America, six in the Middle East and Africa and the remainder in Europe and Latin America.

Across industries, nine, or 60%, of the quarter's rising stars were non-financial corporations, while five, or one third, were Turkish banks whose ratings were upgraded following the upgrade of the Turkish sovereign in June. US packaging company MeadWestvaco Corporation and two of its subsidiaries were also among the third quarter's rising stars.

Looking ahead, Moody's Credit Transition Model (CTM) predicts that the global fallen angel rate will rise to 0.7% in the final quarter of 2012. And consistent with that forecast, Moody's investment-grade distress index indicates that market prices for investment-grade issuers fell during the third quarter.

"Lower prices for investment-grade companies in the third quarter signal a higher number of fallen angels in the fourth, and European banks are expected to make up the bulk of these," Metz says. The fallen angel rate is expected to rise to 1.4% in Europe, compared with 0.4% in North America and 0.2% in Asia.

And among speculative-grade issuers globally, CTM predicts that 0.5% will be upgraded to investment grade in 2012's final quarter. Regionally, the rising star rate is projected to be 0.5% in North America, 0.4% in Europe and 0.6% in Asia.

Moody's research subscribers can access this report at http://www.moodys.com/research/Rating-Transition-Risk-for-Investment-Grade-Issuers--PBC_146741.

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Albert Metz MD - Credit Policy Research Moody'sInvestors Service, Inc.Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Sharon Ou Vice President - Senior Analyst Moody's Investors Service, Inc. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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