NEW YORK--()--A negative rating drift persisted for global corporate issuers in the third quarter, according to a new report by Fitch Ratings. However, credit quality showed divergent paths across emerging and developed markets. Downgrades trailed upgrades across the universe of Fitch-rated emerging market issuers while developed market issuers continued to see more downgrades than upgrades.
Downgrades affected a modest 1.2% of emerging market issuers in the third quarter, below the group's upgrade rate of 2.3%. Across developed markets, the 4.2% share of issuers downgraded edged below the 4.9% recorded in the prior quarter but topped upgrades of 2.4%.
By broad sector, FI developed market issuer downgrades, 4.5%, surpassed upgrades of 1.7%, the 20th consecutive quarter to register a negative rating drift for financial entities. Industrial rating activity was also negative but more balanced with downgrades of 4% and upgrades of 3%, slightly worse than the prior quarter's respective 3.1% and 2.9%.
Emerging market issuers saw a surge in downgrades in 2008 to 2009, which has since significantly diminished. Fitch forecasts 2012 economic growth of 4.3% for emerging markets and 0.9% for major advanced economies.
Downgrades exceeded upgrades by a margin of 1.4 to 1 for all global corporate entities in the third quarter.
The Fitch-rated global corporate issuer default rate remained low through September, at 0.44% year to date. Fitch recorded 12 defaults in the first nine months of 2012 -- all speculative-grade rated entities.
The share of Fitch-rated global corporate issuers assigned a Negative Outlook inched up at the end of the third quarter to 14% from 13% in the prior quarter. Meanwhile, Positive Rating Outlooks slipped to 5% from 6%, quarter over quarter.
For a full review of global rating activity by region and industry through September, please see Fitch's new report titled 'Global Corporate Rating Activity Update - Third Quarter 2012', available on Fitch's web site at 'www.fitchratings.com' under 'Credit Market Research'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: Fitch Global Corporate Rating Activity Update ￢ﾀﾔ Third Quarter 2012