Credit rating downgrades continued to outpace upgrades in the first quarter, Fitch Ratings reports, although conditions were consistent with the previous quarter.
The rating agency said today that downgrades edged upgrades by a margin of 1.3 to 1 in the first quarter, which was more or less in line with the ratio in the prior quarter.
However, it also says that rating activity was more subdued overall at the beginning of this year, with downgrades affecting 2.6% of issuers and upgrades affecting 1.9%, down from 3.5% and 2.7% in the previous quarter, respectively.
For financial institutions, downgrades lagged upgrades in the first quarter, Fitch notes; which was the second consecutive quarter of net positive rating activity for financial institutions, after more than four years of credit deterioration.
However, across global industrials, downgrades continued to exceed upgrades, it says. And, it notes that the impact of sovereign downgrades to Italy, Cyprus, Egypt and South Africa were also felt in the first quarter, contributing to an overall ratio of corporate downgrades to upgrades of 2.7 to 1 in the region.
Downgrades also topped upgrades across emerging market industrials and financial entities at the start of the year, for the first time since early 2012. In contrast, the rating activity mix for developed market issuers remained steady, with downgrades continuing to outpace upgrades 1.3 to 1.
Fitch also reports that its rated global corporate issuer default rate remained modest at 0.18%, mimicking results from the same period a year earlier. It saw five corporate defaults in the first quarter, and all involved speculative-grade entities.
Finally, the rating agency reports that the share of global corporate issuers assigned a negative outlook dipped to 13% at the end of March from 14% in December. The share of issuers carrying a positive outlook was unchanged at 5% quarter over quarter, it says.