Fitch Ratings Releases Corporate Bond Transition Study.Business Editors NEW YORK--(BUSINESS WIRE)--Nov. 18, 2002 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has released its first historical rating transition study for Fitch-rated global corporate issuers over the 12-year period from 1990-2001. 'Although rating movements are influenced by many variables, including corporate strategy, the macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. environment, and of course credit conditions, the data presented in the report show that Fitch ratings experienced substantial stability over the 12-year period, especially at the investment-grade investment-grade Of, relating to, or being a bond suitable for purchase by institutions under the prudent man rule. Investment-grade is restricted to those bonds graded BBB and above by Standard & Poor's and graded Baa3 and above by Moody's. level,' said Mariarosa Verde, Senior Director of Credit Market Research, Fitch Ratings. 'For all investment grade issuers, 95.2% either maintained their rating or were upgraded within one year and 92.4% maintained their rating or were upgraded within two years. Furthermore, the average annual upgrade to downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. ratios for 'A', 'BBB' and 'BB'-rated companies were quite symmetrical symmetrical equally on both sides. symmetrical multifocal encephalopathy inherited disease in two forms: Limousin form appears at about a month old with blindness, forelimb hypermetria, hyperesthesia, nystagmus, aggression, weight , at approximately one to one.' Overall, transition rates for Fitch-rated corporate bond issuers compared favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to the statistics reported by the other major rating agencies. From 1990-2001, the 'AAA' category, not surprisingly, experienced the greatest stability. No 'AAA'-rated issuer was downgraded to non-investment grade either over a one- or two-year period. For 'AA' and 'A'-rated issuers, the percentage of ratings downgraded to non-investment grade was extremely small. 'BBB'-rated issuers, on the other hand, had a 4.8% and 7% probability of being downgraded to non-investment grade over a one and two year period, respectively, but the vast majority of 'BBB' downgrades resulted in 'BB' ratings. This pattern held for each of the investment-grade categories, meaning that most downgrades were clustered in the next rating category. The report includes an update of Fitch fitch: see polecat. global corporate default rates by rating category through 2001. The Fitch corporate default rate rose to .83% in 2001, nearly double the level of .44% recorded in 2000. In general, both default rates and rating volatility accelerate substantially during periods of economic distress. The report discusses rating movements in 2001 compared to the historical averages. The report, 'Fitch Historical Corporate Bond Rating Transition Study', is available on the Fitch Ratings web site at 'www.fitchratings.com' in the 'Credit Market Research' section under 'Research', or by contacting the Ratings Desk at 1-800-893-4824. |
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