Amid ongoing global trade conflict, elevated uncertainty and rising economic headwinds, corporate credit rating downgrades continue to outpace upgrades in the third quarter, Fitch Ratings reports.
For the third straight quarter, there were more downgrades on corporate credit ratings than upgrades in Q3, and the distribution of global rating outlooks also deteriorated a bit in the quarter, it said.
Companies with high-yield ratings saw a higher ratio of negative rating activity, with negative actions outnumbering positive actions. Among investment-grade companies, it was the opposite, as positive rating actions outpaced negative moves during the quarter.
The chemicals sector had the most rating actions, with 10% of the total, Fitch said — followed by the tech sector at 9% and the energy industry at 7%.
By geography, North America led the rating activity, with 25 downgrades in the latest quarter, compared with 22 upgrades, Fitch said.
And in the Europe, Middle East & Africa (EMEA) region, there were 22 downgrades and 20 upgrades, it noted.
Ratings were much more stable in Latin America, which saw nine downgrades and five upgrades, and in the Asia-Pacific region, which had four of each, Fitch said.
The distribution of negative outlooks was similar in all regions, at about 11%, Fitch said. And, while positive outlooks ranged between 9% and 11% in most regions, in the Asia-Pacific region, it was just 4%.
“This means that the net share of outlooks was -7% in [Asia-Pacific] and -3% in EMEA, while it was about neutral in Latin America and North America,” the report noted.