Fitch: Downgrades Decline from 2009
June 9, 2010
The number of investment grade issuers that could potentially be downgraded to junk status has declined significantly from last year, according to a report published by Fitch Ratings.
The number of issuers at risk of a downgrade to speculative grade has dropped nearly 75% since last September, the rating agency reported. Most of these potential fallen angels were upgraded to a stable outlook last year, while one was downgraded to junk.
The report noted that, so far in 2010, Fitch has upgraded two high yield companies to investment grade and downgraded one to high yield status. The report cautions that while things have recovered somewhat, ratings could head south again if the economy sours or fails to keep up the pace of recovery.
“To the extent that economic growth continues across many regions and a gradual return to strong credit metrics follows, more positive rating actions could occur this year,” Fitch analysts said in the report. “However, positive rating actions may be somewhat constrained in the near term as risk factors remain, including persistent high unemployment rates, which could slow the trend of economic improvement.”
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