Corporate credit quality improved modestly in the third quarter, with the ratio of credit rating upgrades to downgrades at 1.16 during the quarter, reports Moody’s Investors Service.

Regional variations in credit-quality trends continued, Moody’s said, with upgrades slightly exceeding downgrades in North America, after being fairly balanced in the second quarter.

The Asia-Pacific region continued to see many more upgrades than downgrades — 24 upgrades compared to only 9 downgrades — in third quarter, but the torrid pace of upgrades seen in the past few quarters has slowed down, according to Moody’s. The Latin America region also saw more upgrades than downgrades.

In Europe, average credit quality declined modestly, with 3.2% of the issuers downgraded, compared to 1.0% of issuers that were upgraded. This decline in credit quality is in contrast to the credit quality improvements observed in Europe over the past several quarters.

“Certain sectors like hotels and leisure, media, entertainment and consumer products saw strong credit quality improvements,” says Moody’s vice president, Praveen Varma, author of the report, “with many more issuers upgraded than downgraded.” However, industries such as automotive, forest products, metals and mining experienced more downgrades than upgrades, with a high number of negative outlooks in industries like aerospace, automotive, healthcare and forest products.

Among all issuers globally, 9.4% had negative outlooks at the end of the quarter, compared to 7.8% with positive outlooks. The ratio of negative outlooks to positive outlooks was even more lopsided within the speculative-grade sector.

The rating agency reports that there was a marked increase in both upgrades and downgrades of bond ratings during the quarter, but much of the increase in rating activity was due to the rating changes accompanying the introduction of loss given default assessments and probability of default ratings to the obligations of the North American speculative-grade issuers. A large share of all rating actions were, therefore, concentrated in the speculative-grade range of Moody’s rating spectrum.