Fitch Ratings notes during the third quarter of 2014 (3Q'14) and for the second straight quarter, U.S. public finance rating upgrades outnumbered downgrades.
Like 2Q'14, the larger number of upgrades was primarily due to the upgrade of a number of securities related to a single entity; in 2Q'14, it was the state of New York, while in 3Q'14 it was Florida Housing Finance Corp.
Fitch downgraded 50 credits, which represented approximately 5.6% of all rating actions and $98.3 billion in par value. In 2Q'14, Fitch downgraded 36 credits. Fitch upgraded 68 credits, which represented 7.5% of all rating actions and $17.1 billion in par value. In 2Q'14, Fitch upgraded 47 credits.
The ratings upgrades to multifamily project bonds supported by Florida Housing Finance Corp.'s affordable housing guarantee fund accounted for 27 of the third-quarter upgrades.
The number of downgrades was less than upgrades by a ratio of 0.7:1. Downgrades were less than upgrades by 0.8:1 in the prior quarter. The downgrade to upgrade ratio by par value was up again after taking a dip in the second quarter, increasing to 5.8:1 from 0.9:1.
The number of Negative Rating Outlooks (198) continued to exceed the number of Positive Rating Outlooks (65), resulting in a 3.0:1 ratio at the end of the third quarter. A majority of the rating actions (82%) during the third quarter were affirmations. Furthermore, 92% of ratings had a Stable Rating Outlook at the end of the third quarter.
