Standard & Poor's Ratings Service said the potential number of issuers to be downgraded to speculative grade from investment grade hit an 18-year high in February at 82, surpassing the 75 in January as the recession's toll continues to mount.

The number of fallen angels, defined as entities rated BBB- with either a negative outlook or on watch for downgrade, was a steep increase from an average of 47 in 2008.

S&P said deteriorating investor and consumer confidence, falling asset prices and tightened credit markets will likely continue as the recessionary economic and credit conditions worsen.

The sectors leading the fallen-angel list include nonwater utilities at 10, followed by consumer products and banks with nine each. The media and entertainment sector and homebuilders/real estate companies have six each.

This year, 19 entities have moved to speculative-grade territory. New fallen angels over the past month include American Capital Ltd., Capmark Financial Group Inc., iStar Financial Inc. (SFI), Gannett Co. (GCI), the Republic of Latvia, Security Benefit Life Insurance Co., Janus Capital Group Inc. (JNS), Allied Capital Corp. (ALD), MBIA Inc. (MBI), Fortis Bank SA/NV and PHH Corp. (PHH).

Finance companies lead 2009's additions to the fallen angels list with six, followed by banks with entities and media and entertainment and insurance with two each.

-By John Kell, Dow Jones Newswires; 201-938-5285; john.kell@dowjones.com