Fitch Ratings notes that during the first quarter of 2014 and for the 21st consecutive quarter, U.S. public finance rating downgrades outnumbered upgrades.
Downgrades still account for a small percentage of total public finance rating actions. Fitch downgraded 37 credits, which represented approximately 5.2% of all rating actions and $51.9 billion in par value. In 4Q'13, Fitch downgraded 25 credits. Fitch upgraded 21 credits, which represented 3% of all rating actions and $2 billion in par value. In 4Q'13, Fitch upgraded 23 credits.
While negative actions are expected to remain elevated, as negative rating outlooks exceeded positive rating outlooks (2.6:1) at the end of 1Q'14, this is the third quarter in a row that this ratio has decreased. The vast majority of rating actions (88%) 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.
The number of downgrades exceeded upgrades by a margin of 1.8:1, which increased from 1.1:1 in the prior quarter. Due to sizable downgrades in the first quarter and the relatively small par amount of upgrades, the downgrade to upgrade ratio by par value increased dramatically to 25:1, up from 1.7:1 in the prior quarter.
