Fallen Angels: More Companies Are Being Cut to 'Junk' Status

Ratings on 15 companies worldwide were cut to junk status in June, the third-highest total since at least 1987, as weak economies, the housing slump and heavy debt took a toll, Standard & Poor's said on Monday.

Companies cut to junk status, so-called fallen angels, are relatively rare but have surged amid the global recession.

Year to date, 60 issuers have been cut to junk status, affecting $209 billion of debt, S&P said in a statement.

Another 75 issuers with $255 billion in rated debt are teetering on junk status, the rating agency said.

Downgrades to junk status can cause a surge in borrowing costs as investors demand higher yields to compensate for the risk of owning a company's loans or bonds.

U.S. commercial lender CIT Group , grappling with a liquidity crunch on Monday, was the largest company cut to junk last month, with $38.2 billion in rated debt. S&P downgraded it to BB-minus on June 12, three steps below investment grade.

S&P added a further cut Monday, lowering CIT's counterparty credit ratings to 'CCC+/C' from 'BB-/B'. The ratings remain on CreditWatch, where they were placed with negative implications on June 12, 2009, S&P said.

Nineteen banks and finance companies have been cut to junk status this year, more than any other industry, as fallout from the global financial crisis lingered. Another 17 are vulnerable to a downgrade to junk, S&P said.

Other cuts to junk status in June included Ambac Financial Group , Renault, Ethan Allen Interiors , Synovus Financial Corp and Huntington Bancshares .

June's fallen angel tally was the third-highest since S&P began tracking them in 1987.

The highest was December 1997 during the Asian financial crisis, and the second-highest in March 2009.

• Slideshow: Largest Bank Failures of 2009

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