Fitch Ratings: Ratings with negative outlook double

KUALA LUMPUR: Fitch Ratings said the number of ratings with negative
credit outlooks has roughly doubled over the past six months, mainly
due to the fallout from the eurozone.
The ratings agency said on
Tuesday ratings with negative credit outlooks had increased across the
sovereign (19.8% versus 10.3%), international public finance (48.3%
versus 22.4%), financial institution (19.3% versus 10.7%) and insurance
sectors (11.1% versus 5.6%).
In its latest global cross-sector
credit outlook report, Fitch attributed it mainly due to new shocks
centred on the eurozone, which continued to weigh down global economic
recovery while also seeping 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," it said.
Fitch
said the weak US recovery reflected 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.
However, it pointed out the risks
included uncertainty regarding fiscal policy and the diminished
capacity for significant fiscal and monetary policy stimulus.
As for many large emerging markets, it said they were facing 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," it said.
The universe of highest grade ratings
('AAA' and 'AA') continued to shrink, with all eight global sectors
seeing 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.