Global credit quality for corporate issuers continued to worsen during the first quarter of 2009, reports Moody’s Investors Service.

“This downgrade rate is higher than pre-economic crisis figures,” reports Moody’s analyst, Jennifer Tennant. For example, the downgrade rate in the first quarter was 13.8%. By comparison, the rate for 2006 as a whole was 10.2%, and the average downgrade rate from 1983-2009 is 12.5%, the rating agency said.

An even larger shift is evident in upgrade rates. The upgrade rate for first quarter of 2009 was 0.5%, much lower than the average upgrade rate of 7.9% from 1983-2009.

In addition, current watchlists and outlooks also reflect the severe credit and economic environment, says Tennant. At the end of the first quarter of 2009, 9.7% of rated corporate issuers were on review for downgrade, compared to 1% on review for upgrade.

Similarly, a greater percentage of issuers held negative outlooks than positive ones, and the negative trends have been growing, says Moody’s. At the end of the first quarter, 26.7% of rated issuers had negative outlooks, compared to 2.7% with positive outlooks.

The credit outlook for investment-grade issuers remains slightly more positive than for speculative-grade issuers, Moody’s said. Both categories, however, had more issuers on review for downgrade than for upgrade. “Investment-grade issuers show more stability while speculative-grade issuers were more likely than investment-grade issuers to experience downgrades and upgrades in the first quarter of 2009,” says Tennant.

On a positive note, the U.S. and Canada also have the highest percentage of positive outlooks and watches-for-upgrade, adds Tennant.

IE