The outlook for global corporate credit ratings deteriorated in the first quarter amid rising economic uncertainty, says Fitch Ratings.
In a new report, the rating agency said that the distribution of ratings weakened further in the first quarter, “due in part to risk stemming from the Iran conflict.”
In turn, the rise in negative rating outlook revisions indicates that rating downgrades will likely accelerate in the next 12-18 months, it noted.
However, the volume of rating changes moderated in the first quarter, with 77 revisions in the period, down from 124 in the previous quarter — and those revisions were essentially balanced between upgrades (39) and downgrades (38).
Most of the rating activity involved high-yield issuers, which accounted for 70% of the rating changes globally, while investment-grade issuers made up the other 30%, Fitch reported.
Among high-yield issuers, 65% were downgraded while 35% were upgraded.
For investment-grade firms, just 13% of the revisions were downgrades, and 87% were upgrades.