Fitch Ratings notes that during the first quarter of 2013 and for the 17th consecutive quarter, U.S. public finance rating downgrades outnumbered upgrades.
Both the number of upgrades and downgrades increased from the fourth quarter of 2012.
Negative actions are expected to remain elevated, as negative rating outlooks exceeded positive rating outlooks (3.3:1) in 1Q'13. However, a vast majority of rating actions (83%) during the first quarter were affirmations, with no change in rating outlook or rating watch status.
Furthermore, 91% of ratings had a stable rating outlook at the end of the first quarter.
Downgrades still account for a small percentage of total public finance rating actions. Fitch downgraded 57 credits, which represented approximately 6.9% of all rating actions and $23.9 billion in par value. In 4Q'12, Fitch downgraded 41 credits. Fitch upgraded 31 credits in 1Q'13, which represented 3.8% of all rating actions and $6.1 billion in par value.
In 4Q'12, Fitch upgraded 15 credits.
The number of downgrades in 1Q'13 exceeded upgrades by a margin of 1.8:1, which decreased from 2.7:1 in the prior quarter. The downgrade to upgrade ratio by par value also decreased to 3.9:1 from 4.6:1 in the prior quarter.
