Fitch Ratings has released its annual global corporate transition and default study, examining global corporate ratings migration and default rates in 2006 and over the long term.

For the third consecutive year, it reports, upgrades readily surpassed downgrades in 2006, most notably among global financial institutions and emerging market entities. Overall, upgrades affected 16.1% of Fitch’s global corporate ratings universe, while downgrades affected 6.9%.

“Fitch’s 2006 migration data revealed substantial rating stability and above average positive rating volatility, comparable to 2005 results,” said Charlotte Needham, senior director of Credit Market Research.

“Across all of Fitch’s corporate rating categories, 93% of ratings either remained the same or experienced upgrades in 2006, compared with 88% on an average annual basis over the period 1990-2005,” added Mariarosa Verde, managing director of Credit Market Research.

Low defaults were another reflection of generally improving credit quality supported by favorable funding conditions and robust global economic growth. Fitch-rated defaults totaled just two in 2006, compared with eight recorded in 2005.

Fitch says its long-term default rates across the various rating categories continued to show a strong relationship between Fitch’s ratings and default risk. The 1990-2006 average annual default rate across Fitch’s investment grade corporate ratings, for instance, totaled 0.10%, while Fitch’s average annual speculative grade default rate was 2.94%.

Furthermore, an analysis of Fitch’s rating performance using Lorenz curves and Gini coefficients covering the period 1990 – 2006, again revealed that Fitch’s ratings exhibit a strong ability to predict default, producing one-year, three-year and five-year Gini coefficients of 87.5%, 78.2% and 75.4%, respectively.