U.S. public finance benefited from the gradual economic recovery in 2013, although certain credits faced fiscal and regulatory challenges, according to Fitch Ratings in a new report.
For all U.S. public finance sectors in aggregate, the number of downgrades decreased to 189 in 2013 from 198 in 2012, while the number of upgrades increased to 101 from 84. The downgrade to upgrade ratio by rating action was 1.9:1, decreased from 2.4:1 in 2012. The downgrade to upgrade ratio by par was 1.1:1, decreased from 2.9:1 in 2012.
Downgrades have outnumbered upgrades in each of the last five years. Tax-supported ratings downgrades accounted for the bulk of all U.S. public finance rating downgrades again last year (60% of all downgrades).
Fitch also reported that the number of ratings with a Negative Outlook at the end of 2013 (232) was the same as at the end of 2012. The number of Positive Rating Outlooks increased to 85 from 61 the previous year. Negative Rating Watches decreased to 40 from 49.
It is important to note that downgrades account for a small percentage of total public finance rating actions. A majority of rating actions (85%) during the year were affirmations. Additionally, 90% of Rating Outlooks were Stable at the end of 2013.
The report also includes data on rating actions taken during the fourth quarter of 2013.
'U.S. Public Finance Rating Actions 2013' is available at 'www.fitchratings.com' or by clicking on the link.
Additional information is available at 'www.fitchratings.com'.
Source: Fitch Ratings
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