Global credit quality continues to deteriorate – Moody’s

Global credit quality continued its negative trajectory during the fourth quarter of 2008, according to Moody's Investors Service. The upgrade-downgrade ratio was 0.07 during the fourth quarter and 0.24 for 2008 overall, highlighting the negative credit environment in the second half of the year.
Watchlists and outlooks followed a similar pattern. At the end of the fourth quarter, 9.3% of rated issuers were on review for downgrade, compared to 1.3% on review for upgrade. More than one in five rated issuers held negative outlooks at the end of the fourth quarter, compared to 3.7% with positive outlooks.
"These rating actions and reviews highlight the growing impact that a deepening global economic downturn is having on the credit condition of corporate debt issuers," said Moody's analyst Jennifer Tennant.
Regardless of the region, there are more issuers on review for downgrade than review for upgrade, says Moody's. However, Europe has the largest disparity, with an eleven-to-one watch-for-downgrade/watch-for-upgrade ratio. The United States and Canada, Europe and Middle East & Africa have the largest percentage of negative outlooks.
On a positive note, the Middle East and Africa have the largest percentage of positive outlooks and Latin America has the highest percentage of rated issuers on watch for upgrade, said Tennant.
The quantity of ratings actions and outlooks differed by industry: Building Materials, Automotive and Hotels, Gaming & Leisure all had large proportions of downgrades in the fourth quarter of 2008 and Finance, Securities & Leasing had the largest absolute number of downgrades. All of these industries also currently have many more issuers on review for downgrade than review for upgrade.