LONDON -- Fitch Ratings said Thursday that negative rating outlooks on global corporates are rising as an effect of the intensification of the euro-zone crisis in the second half of 2011.
In its latest bi-annual global credit outlook, Fitch said the trend seen in the last two years of global rating outlook stabilisation has been interrupted.
"The proportion of ratings on negative outlook globally rose in the second half of 2011 to end the year at 9.3%, up from a post-Lehman low of 6.8% in Q211 [second quarter 2011].
However, this rise still remains substantially below the 18.3% seen at Q309 [third quarter 2009]," said Monica Insoll, Managing Director of Fitch's Credit Market Research group.
Sector-wise, Fitch said banks clearly experienced the greatest rise in negative outlooks, given their rating linkages with euro-zone sovereigns.
Negative outlooks on banks climbed to 11.5% from 8.5% at end June 2011.
Other segments which nudged up from cyclical lows of negative outlooks during the last six months include insurance, corporates and U.S. public finance, Fitch said.
Highest-level ratings--'AAA" and "AA" categories--are increasingly rare as their share fell to 24% from 32% for global sovereigns, and to 33% from 61% in international public finance, Fitch said.
Highest-level ratings are diminishing in those sectors most directly exposed to euro-zone debt woes. Only 8% of bank ratings are now at this level, down from 13% a year ago, with insurance showing a similar result, Fitch said, adding that it expects this trend to continue.
In the absence of a "comprehensive solution," with politicians instead taking a gradualist approach, Fitch expects the euro-zone crisis to continue and to be punctuated by further episodes of severe financial-market volatility.
"Achieving growth, while simultaneously engaging in austerity programs to wrestle government budgets under control is a serious challenge which will continue to impact the global credit outlook," Insoll said.
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In its latest bi-annual global credit outlook, Fitch said the trend seen in the last two years of global rating outlook stabilisation has been interrupted.
"The proportion of ratings on negative outlook globally rose in the second half of 2011 to end the year at 9.3%, up from a post-Lehman low of 6.8% in Q211 [second quarter 2011].
However, this rise still remains substantially below the 18.3% seen at Q309 [third quarter 2009]," said Monica Insoll, Managing Director of Fitch's Credit Market Research group.
Sector-wise, Fitch said banks clearly experienced the greatest rise in negative outlooks, given their rating linkages with euro-zone sovereigns.
Negative outlooks on banks climbed to 11.5% from 8.5% at end June 2011.
Other segments which nudged up from cyclical lows of negative outlooks during the last six months include insurance, corporates and U.S. public finance, Fitch said.
Highest-level ratings--'AAA" and "AA" categories--are increasingly rare as their share fell to 24% from 32% for global sovereigns, and to 33% from 61% in international public finance, Fitch said.
Highest-level ratings are diminishing in those sectors most directly exposed to euro-zone debt woes. Only 8% of bank ratings are now at this level, down from 13% a year ago, with insurance showing a similar result, Fitch said, adding that it expects this trend to continue.
In the absence of a "comprehensive solution," with politicians instead taking a gradualist approach, Fitch expects the euro-zone crisis to continue and to be punctuated by further episodes of severe financial-market volatility.
"Achieving growth, while simultaneously engaging in austerity programs to wrestle government budgets under control is a serious challenge which will continue to impact the global credit outlook," Insoll said.
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