NEW YORK--(BUSINESS WIRE)--Europe's slow exodus from recession continued to exert pressure on sovereign and international public finance (IPF) credit quality in 2013. Local and regional governments (LRGs) remained challenged by expanding deficits and contracting revenues, according to a new Fitch Ratings study.
Downgrades of France, the United Kingdom, Italy, and Ukraine during 2013 precipitated the bulk of the year's IPF downgrades, accounting for 88% of negative actions. The resulting 2013 IPF downgrade rate was 28.9% and the upgrade rate, 5.4%. Both measures were down from 36.3% and 7.4%, respectively, recorded in 2012.
For the sixth consecutive year Fitch recorded no international public finance defaults. Fitch registered just nine international public finance defaults over the 1995-2013 period, resulting in an average annual issuer-based default rate of 0.42%.
Debt expansion is stabilizing in peripheral eurozone LRGs and operating performance is expected to improve even as higher interest costs may result in some fiscal pressures. In Latin America and Asia, economic improvement is feeding through to local governments with the increase in fiscal revenues boosting much-needed infrastructure investment, particularly in public transportation through municipal entities. Part of this activity is being funded by debt. However, the debt burden is still relatively modest and is not expected to put near-term pressure on ratings.
Fitch's new study provides data and analysis on the performance of Fitch's international public finance ratings in 2013 and over the long term, capturing the 1995-2013 period. The report provides summary statistics on the year's key rating trends.
The study is titled "Fitch Ratings International Public Finance 2013 Transition and Default Study" and is available on Fitch's website under Credit Market Research.
Additional information is available on www.fitchratings.com.
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.
Applicable Criteria and Related Research: Fitch Ratings International Public Finance 2013 Transition and Default Study