In a report sure to provide new ammunition to private equity opponents, Standard & Poor’s says p.e. activity has contributed to the decline in credit quality in Europe and globally.

With leverage levels in Europe up to 5.4 times corporate profits from 4.3 times in 2003, S&P wrote, “the advent of private equity sponsors in the past three years introduces new risks for European ratings.”

The report shows that the share of junk-rated companies in Europe has skyrocketed in the past 15 years, up more than fourteen-fold to 17.2% in 2006. That’s also more than three times higher than just 10 years ago. In the U.S., the number is over 50%.

“Companies within this group are potentially undermining their credit quality through the use of dividend recapitalization plans to boost returns and quickly recoup their initial investment in sponsored companies,” the report said.

Also troubling, according to the report, is that speculative-grade companies have sunk deeper into junk, with the global  share of single-B rated companies—two grades below the highest junk rating, triple-B—is at an 11-year high, remaining above 50% in both of the last two years.