Global corporate rating actions in the third quarter continued to reflect worsening credit and economic conditions with downgrades outnumbering upgrades 3.6 to 1, up from 1.8 to 1 in the second quarter, Fitch Ratings said Thursday.

Financial institutions accounted for the brunt of negative rating activity in the third quarter and year-to-date period with downgrades exceeding upgrades 5.3 to 1 in the third quarter, and 3.2 to 1 on a year-to-date basis, Fitch reported. Among industrials, downgrades led upgrades 1.8 to 1 in the third quarter, it added.

Emerging market corporate credits fared better than their developed market counterparts for the period through September, registering a positive downgrade to upgrade ratio of 0.4 to 1, while developed markets recorded net negative rating movements for the same period of 4 to 1, Fitch said. However, Firtch also noted that emerging market rating outlook and rating watch assignments have turned increasingly negative, indicating that credit quality is beginning to come under pressure in these previously robust markets.

“Across Europe and North America, 21% of corporate issuers were assigned either a Negative Rating Outlook or Watch at the end of September compared with 13% at the beginning of the year,” said Charlotte Needham, senior director of Fitch Credit Market Research. “The share of these issuers on Positive Rating Outlook or Watch declined to 7% from 9% at year end 2007.”

“This year’s rating activity clearly reflects the depth of the credit crisis and deteriorating prospects for global economic growth,” added Mariarosa Verde, managing director of Fitch Credit Market Research.

IE