NEW YORK--(BUSINESS WIRE)--Soft U.S. economic growth alongside state and local government budgetary constraints remained key factors pressuring U.S. public finance credit quality in 2013, according to Fitch Ratings.
Fitch expects most U.S. public finance ratings to maintain stable outlooks in 2014. The strengthening U.S. recovery should support general improvements in government revenues. However, all sectors will continue to face varying degrees of fiscal, economic and regulatory uncertainty.
A negative rating drift persisted in 2013 as downgrades topped upgrades by a margin of 2 to 1, according to a new Fitch Ratings report. However, the share of ratings downgraded and upgraded, 5.2% and 2.6%, respectively, was modest. Downgrades and upgrades refer to year-over-year rating activity.
The majority of U.S. public finance ratings, 92.1%, remained the same in 2013.
The most significant credit event for local governments in 2013 was the July 18 Detroit bankruptcy filing. The downgrade of Detroit's pension obligation certificates of participation, unlimited tax general obligation and limited tax general obligation ratings to 'D' comprised the year's defaults. The resulting Fitch-rated U.S. Public Finance 2013 default rate was 0.09%.
Fitch's new study provides data and analysis on the performance of Fitch's U.S. public finance ratings in 2013 and over the long term, covering the period 1999-2013. The report provides summary statistics on the year's key rating trends.
The report is titled "Fitch Ratings U.S. Public Finance 2013 Transition and Default Study" and is available on Fitch's website under Credit Market Research.
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.
Applicable Criteria and Related Research: Fitch Ratings U.S. Public Finance 2013 Transition and Default Study