Fitch Ratings released a draft on Thursday detailing changes to its U.S. tax-supported bond rating criteria.
The proposed changes were developed to improve the communication of Fitch's analysis, the agency said in a press release. The revisions were "largely a reframing of current criteria, rather than a major change in approach, as the elements being considered are largely unchanged," Fitch said
Fitch said it expects less than 10% of the ratings covered by the criteria to be changed, divided equally between upgrades and downgrades.
Fitch said that in recent years about 10% of tax-supported ratings have changed annually, so the impact of the new criteria is not expected to be much different than the norm.
"The upgrades are most likely to result from the more focused consideration of the economy in conjunction with the more explicit recognition of the strong operating environment for U.S. governments," Fitch said.
"The downgrades are most likely to result from the more issuer-specific consideration of reserve funding adequacy in conjunction with the introduction of scenario analysis into the rating process."
Fitch invited feedback from market participants and said comments should be sent by Nov. 20 to pfcomment@fitchratings.com
The final criteria are expected to be approved by Jan. 20, 2016, and will be applied immediately after being published.
