U.S. financial and nonfinancial downgrades have totaled 462 since the beginning of 2008, while negative bias rose to 29% at the end of third-quarter 2008 from 24% a year earlier, according to the article, titled "U.S. Corporate Downgrades Forecasted To Peak In Mid-2009 (Premium)." Downgrades and negative bias have reached similar levels seen during the past recession.
"We believe the economy is in a recession and project real GDP to grow only 1.6% in 2008 before falling 0.1% in 2009," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "We expect an increase in negative rating actions and defaults as the economy continues to weaken and corporates and consumers deleverage."
In the past, downgrades have peaked at or within one-quarter of the bottom in real GDP growth. If history is any indication, we could expect downgrades to peak between the first and third quarters of 2009.
Negative bias is on the rise and has reached similar levels seen during the past recession. The number of firms with a negative outlook or ratings on CreditWatch with negative implications is supportive of a continued rise in downgrades over the next few quarters.
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Media Contact:
Mimi Barker, New York (1) 212-438-5054, [email protected]
Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760