Public finance rating changes by Standard & Poor’s during the fourth quarter of 2012, as well as for the entire year, tended to be mostly positive.
During the last three months of 2012, the rating agency gave 132 upgrades, compared to its 82 downgrades. For the entire year, it gave 567 upgrades and 447 downgrades.
There were no defaults on issues rated by Standard & Poor’s during the fourth quarter. For the year, the number of defaults totaled 11 among nine different obligors.
The ratio of upgrades to downgrades was 1.61 to 1, not including the housing sector, which Standard & Poor’s analysts said represents a turnaround from the third quarter, when downgrades outpaced upgrades by 1.06 to 1. Except for the third quarter, upgrades outpaced downgrades during 2012.
In the state and local government sector, the credit rating agency gave 90 upgrades and 55 downgrades during the fourth quarter.
“State and local governments exhibited a stronger trend reversal than U.S. public finance overall, with an upgrade to downgrade ratio of 1.64 to 1,” analysts said.
The utility sector remained strongly positive throughout the year, with the most upgrades in the fourth quarter. The sector had 26 upgrades and 10 downgrades. The transportation and housing sectors also had a strong quarter, with more upgrades than downgrades.
The healthcare sector, with 11 downgrades and six upgrades, and the higher education sector, with five downgrades and four upgrades, were the only two sectors with more negative rating actions than positive in the fourth quarter.
Analysts said that, for another year, the U.S. public finance sector proved to be relatively stable. At the end of December, 40.67% of all public finance ratings were AA-minus or higher, excluding housing.
“Widely publicized concerns about credit quality throughout the sector notwithstanding, the actual degree of credit quality erosion in public finance during the past two years was minimal,” analysts wrote in the report. “At the end of 2011, 41.5% of issues held ratings of AA-minus or higher, only slightly below the 42.3% of ratings at the conclusion of 2010.”