Fitch: Negative
Credit Outlooks Rise as Crisis Drags on Global Growth
In its latest global cross-sector credit outlook report, Fitch
Ratings says that in the last six months the proportion of ratings with
negative credit outlooks has roughly doubled across the sovereign (19.8% v
10.3%), international public finance (48.3% v 22.4%), financial institution
(19.3% v10.7%) and insurance sectors (11.1% v 5.6%).
This has been driven mainly by new shocks centred on the eurozone,
which continue to drag on the global economic recovery and also percolate
through to other sectors and, to an increasing extent, other regions. By
contrast, greater rating Outlook stability was shown in US public finance,
corporates and infrastructure.
The weak US recovery reflects the gradual rebalancing of the
economy, such as the unwinding of excessive household debt and the housing
market correction, rather than a permanent downshift in the growth rate of the
economy. Risks include uncertainty regarding fiscal policy and the diminished
capacity for significant fiscal and monetary policy stimulus.
Many large emerging markets face slowing growth and macroeconomic
policy or rebalancing challenges. This is even as emerging market economies
generally are showing impressive resilience to tough global conditions and are
outperforming developed countries.
The universe of highest grade ratings ('AAA' and 'AA') continues to
shrink, with all eight global sectors experiencing reductions since the end of
2010. The sharpest decline occurred in international public finance, where
eurozone sovereign downgrades had a negative knock-on effect and the high-grade
rating segment halved to 26% in the last six months. For other sectors, the
reduction was in the single-digit percentage point range.
Fitch's semi-annual 'The Credit Outlook' report provides an
overview of the agency's outlook across all rated sectors and regions,
identifying the main macro factors that will drive credit trends over the next
12- 24 months. The report is now available at www.fitchratings.com
Contact:
Monica Insoll
Managing Director
+44 20 3530 1060
Fitch Ratings Limited
30 North Colonnade
London E14 5GN
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