Thu, May 28, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Fitch: U.S. corporate bond downgrade rate 3% in second half 2009 vs 20% first half

Friday, February 19, 2010
Opalesque Industry Update - According to a new Fitch Ratings report, U.S. Corporate Bond Market: A Review of Fourth-Quarter and 2009 Ratings and Issuance Activity, the par value of U.S. corporate bonds affected by downgrades decreased for the third consecutive quarter in the last three months of 2009 to $42.9 billion or 1.2% of market volume, the lowest tally since the second quarter of 2007.

'With upgrades affecting $40.7 billion in bonds, the ratio of downgrades to upgrades was nearly even at year-end, a strong departure from rating activity in the first half of the year when downgrades towered over minimal upgrades' said Eric Rosenthal, Senior Director of Fitch Credit Market Research.

Downgrades continued to slow across the investment grade and speculative grade segments of the market at year-end.

The par downgrade rate (as a share of U.S. corporate bonds outstanding) was 23% in 2009, slightly below 2008's 24%. The vast majority, close to 90%, of the year's negative rating activity occurred in the first half of the year. For perspective, the par downgrade rate was 15.3% in 2001 and 23.4% in 2002.

The investment grade portion of the market experienced a downgrade rate of 20.1% in 2009 and the speculative grade segment, 34.7%. The share of bonds upgraded over the course of the year was 1.8% and 11.2%, respectively, across the two areas.

'The par downgrade rate associated with financial firms in 2009 was 36.5%, substantially higher than the downgrade rate of 12.7% recorded across industrials' said Mariarosa Verde, Managing Director of Fitch Credit Market Research.

Downgrades across financials had a particularly deep impact on the 'AAA' and 'AA' rating categories. At the end of the year, 'AAA' and 'AA' bonds had contracted to just 16.3% of market volume, down from 23.1% at the end of 2008 and 31.4% at the end of 2007.

The speculative grade portion of the market grew to 20.8% at the end of 2009, from 17.5% at the end of 2008 and 2007.

New issuance totaled $626.6 billion in 2009, up 3% year over year. Industrial issuance however grew 65% over the course of the year while financial issuance tumbled 55%.

The market's par rating composition at year-end consisted of the following: 'AAA', 0.7%; 'AA', 15.6%; 'A', 35.9%; 'BBB', 27.0%; 'BB', 8.2%; 'B', 6.8%; and 'CCC'-'C', 5.8%.-KM- To view full 20-page report, click Source

- KM -

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: SEC approves proposed changes to Form ADV, '40 Act - comment period to follow[more]

    Bailey McCann, Opalesque New York: Hedge funds and providers of liquid alternatives will want to pay close attention to proposed reforms approved by the SEC yesterday. The changes will require more frequent reporting, as well as a closer look into social media, liquid alternative strategies, and

  2. Investing - Hedge funds buy swathes of foreclosed subprimes, force up rents, float rent-bonds, Hedge funds buy Actavis, Valeant. ETFs join the party, The most loved biotechs of big hedge funds, Stocks to buy ... according to hedge funds, Atlantic City bond offering attracts hedge funds as buyers, Okumus Fund Management discloses huge new Ascent Capital Group stake[more]

    Hedge funds buy swathes of foreclosed subprimes, force up rents, float rent-bonds From Boingboing.com: When a giant hedge fund is bidding on all the foreclosed houses in a poor neighborhood, living humans don't stand a chance -- but that's OK, because rapacious investors make great landl

  3. Institutions - Institutional investors turn to real estate, planes, Assets at Bostonís five biggest family nonprofits rise to $3.5bn[more]

    Institutional investors turn to real estate, planes From Joins.com: The National Pension Service and domestic emerging market specialists who did not know where to invest in a low interest rate environment are turning to other investments like the blue-chip real estate market abroad.

  4. Opalesque Exclusive: BMO launches multi-strat '40 act fund[more]

    Bailey McCann, Opalesque New York: As we reach new market highs, investors are looking for a way to diversify and protect their portfolios from a potential market correction. Liquid alternatives are rapidly gaining ground as a critical tool for investors to use to mitigate downside risk. The BMO

  5. All hedge fund strategies rebounded last week as market conditions normalize[more]

    Komfie Manalo, Opalesque Asia: After a difficult start this month, all hedge fund strategies ended last week in positive territory, as the Lyxor Hedge Fund Index gained 0.9% (-0.2% MTD, 3.3% YTD). According to Lyxor AMís latest Weekly Briefing, in t

 

banner