U.S. public finance upgrades exceeded downgrades in 2Q16 on 83 upgrades versus 43 downgrades, according to a Fitch Ratings report.
"Roughly 60 percent of the par value of downgrades this quarter were entities related to Puerto Rico, followed by another 25 percent related to the downgrade of the State of Connecticut," said Jessalynn Moro, Managing Director of the U.S. public finance group.
Downgrades in the second quarter represented 4.9% of all rating actions, while upgrades were 9.5% of all rating actions.
Positive and negative rating outlooks continue to converge. Positive rating outlooks increased in 2Q16 to 114 from 10 in 2Q15, while negative rating outlooks decreased to 118 in 2Q16 from 136 in 2Q15.
Negative rating watches increased to 22 in 2Q16 from 21 in 1Q16, and positive rating watches stayed stable at one.
Seventy-eight percent of rating actions were affirmations, with stable rating outlooks remaining nearly the same at 93% compared with 92% in 1Q16.
Based on the present distribution of rating outlooks and rating watches, Fitch expects affirmations to continue to dominate most of U.S. public finance activity.
