Global credit quality improved slightly during the first quarter, as credit rating upgrades narrowly outpaced downgrades, according to Moody’s Investors Service.

During the first quarter of 2007, the ratio of rating upgrades to downgrades was 1.1. In the last quarter of 2006, the number of upgrades to downgrades was roughly equal.

Trends in upgrades and downgrades and also in rating outlooks and reviews changed little during the quarter, and generally indicate stability, Moody’s noted. “Looking ahead, the distribution of rating reviews and outlooks appears less positive — with more issuers on review for downgrade than for upgrade and more negative outlooks than positive outlooks — but these indicators have been very stable over the previous four quarters,” says associate analyst Jennifer Tennant, author of the report.

In all, at the end of the first quarter of 2007, 3.7% of rated issuers were on review for downgrade, compared with 1.6% on review for upgrade. Similarly, 9.1% of rated issuers had negative outlooks, compared with 7.7% with positive outlooks.

As in the previous quarter, the credit outlook for investment-grade issuers is slightly more positive than for speculative-grade issuers, said Moody’s. Both categories have approximately twice as many issuers on review for downgrade than for upgrade. But the investment grade ratings have been generally more stable – a much higher percentage of speculative-grade issuers experienced downgrades, negative outlooks, and but also upgrades during the first quarter.

Credit quality trends by region continue to show strong performance in the Asia Pacific and Latin America, where the ratios of upgrades to downgrades have been high, and also in Europe, where the upgrade-to-downgrade ratio was 1.5 in the first quarter.

By industry, movements in credit quality changed little, with downgrades outpacing upgrades most notably in automotive, consumer products, forest products and packing, as well as in technology and in hotels, gaming, and leisure.