The weak recovery and ongoing European crisis is weighing on the global credit outlook, according to a new report from Fitch Ratings.
In its latest global cross-sector credit outlook report, the rating agency reports that in the last six months the proportion of ratings with negative credit outlooks has roughly doubled across the sovereign, international public finance, financial institution, and insurance sectors.
“This has been driven mainly by new shocks centred on the eurozone, which continue to drag on the global economic recovery and also percolate through to other sectors and, to an increasing extent, other regions,” it notes.
Conversely, greater stability in rating outlooks is evident among corporates, in US public finance, and infrastructure, it says.
The universe of entities with the highest ratings (‘AAA’ and ‘AA’) continues to shrink, Fitch reports, with all global sectors experiencing reductions since the end of 2010. The sharpest decline occurred in international public finance, it says, where eurozone sovereign downgrades has led to the share of ratings at the high-grade cut in half to 26% over the last six months.