Downgrades Outpace Upgrades in July

August 6, 2010

Downgrades outpaced upgrades in July, according to a report published by Standard & Poor’s Friday. It was the first time since March that downgrades topped upgrades.

According to S&P, the downgrade ratio for July was 53%, which is 6% higher than the 12-month trailing average and 12% higher than the average since November 2009. So far this year, S&P upgraded 146 issuers and downgraded 93 issuers in the U.S. speculative-grade market.

The negative bias for the junk-rated market is currently 18%, which lower than the 12-month average of 28%. The market’s positive bias of 13% exceeds the 12-month average of 11%.

“While this may be a indicative of a directional shift in credit quality, we believe it is illustrative of the lingering uncertainty of the credit markets and the broader economy as key issues—including a lack of improvement in employment, inconsistent financial regulation across the globe, and inadequate government stimulus due to rising deficits—continue to concern investors,” S&P analysts said in the report.  

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