Research from Credit Market Academy shows that despite the improvement in the business climate in recent months, ratings downgrades continue to comfortably outpace ratings upgrades. The only silver lining is that the ratio of upgrades to downgrades has improved a bit from what it used to be in the first few months of the year.
Also see Silver Lining (Graphics)
The newsletter Credit Street collates the rating action of five rating agencies every month. Back in February, there were as many as 77 downgrades compared with four upgrades. In March, there were two upgrades and 61 downgrades. Contrast that to rating actions in September, which saw 16 upgrades against 48 downgrades. As the chart shows, July saw a flurry of upgrades, but the momentum has flagged since then. But ratings actions are a lagging indicator, so perhaps we shouldn’t read too much into the large number of downgrades continuing. The ongoing rush to raise money will greatly help repair balance sheets.