Fitch Ratings’ study on U.S. Public Finance (USPF) credit ratings reveals significant momentum in rating changes, particularly negative momentum. Downgrades are more likely to follow a previous downgrade, with a rate 6.2 times higher than after an affirmation or no-action review. Speculative-grade ratings show the highest negative momentum, with a downgrade rate nearly 10 times higher post-downgrade. Positive momentum exists but is weaker, with upgrades following upgrades at a rate of 143% of the overall portfolio. Negative Outlooks remain strong indicators of future downgrades, with a downgrade rate of 13 times higher than Stable Outlooks. The study underscores the predictive value of prior rating actions and Outlooks in signaling future credit quality changes.
Mon 14 Apr, 2025