During the second quarter of 2014 (2Q'14) and for the first time since 3Q'09, U.S. public finance rating upgrades outnumbered downgrades, Fitch Ratings said.
The trend reversed largely due to the upgrade of the state of New York's general obligation bonds and related debt on June 20, 2014.
Fitch downgraded 36 credits, which represented approximately 3.8% of all rating actions and $62.1 billion in par value. In 1Q'14, Fitch downgraded 37 credits. Fitch upgraded 47 credits, which represented 4.9% of all rating actions and $69.9 billion in par value. In 1Q'14, Fitch upgraded 21 credits. The upgrades to New York's debt comprised 17 of the second quarter upgrades.
The number of downgrades was less than upgrades by a ratio of 0.8:1. Downgrades exceeded upgrades by 1.8:1 in the prior quarter. The downgrade to upgrade ratio by par value decreased dramatically to 0.9:1, from 25:1 in the prior quarter, when the par amount of downgrades was unusually large.
The number of Negative Rating Outlooks (208) continued to exceed the number of Positive Rating Outlooks (66), resulting in a 3.2:1 ratio at the end of the second quarter. A majority of the rating actions (87%) during the second quarter were affirmations, with no change in Rating Outlook or Rating Watch status. Furthermore, 92% of ratings had a Stable Rating Outlook at the end of the second quarter.
