The trend in corporate credit ratings was modestly negative in the first quarter and the balance of rating outlooks is negative too, according to Fitch Ratings.
In a new report, the rating agency said that credit downgrades have outpaced upgrades so far this year, reversing the trend observed in the previous quarter.
In the first quarter, there were 46 corporate rating downgrades versus 33 upgrades, Fitch reported. By contrast, there were 55 upgrades and 44 downgrades in the fourth quarter of 2024, it noted.
The balance of rating actions was “significantly negative” in the Europe, Middle East & Africa (EMEA) region, it reported — while the balance was close to neutral in North America, Latin America and the Asia Pacific regions.
Fitch also noted that the global distribution of rating outlooks is marginally negative too, with 13% of rated issuers having negative outlooks, versus 9% with positive outlooks at the start of the second quarter.
In developed markets, the balance of outlooks was relatively even, Fitch reported, whereas the mix is decidedly negative in emerging markets — with 21% of rating outlooks in these markets being negative, and just 6% positive.
In particular, there’s a “record share” of negative outlooks in the Asia Pacific region, it noted, with 32% negative and just 5% positive — which is driven primarily by the negative outlook for China’s sovereign rating, which has led to downside revisions for a number of Chinese corporates.
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