Bonds downgraded
Stocks are bad. Bonds are no great shakes either. Fitch Ratings notes that nearly one in four U.S. corporate bonds was downgraded last year. Of course, that raises the question of whether some of those bonds may initially have been overrated.
A new Fitch Ratings study finds that downgrades affected $891.9 billion in U.S. corporate bonds in 2008, or 24% of U.S. bond market volume, narrowly topping the previous high of 23.4% recorded in 2002 (on $558.1 billion in downgrades).
‘Downgrades, not surprisingly, accelerated significantly in the second half of the year,’ said Eric Rosenthal, Senior Director of Fitch Credit Market Research. ‘In the fourth quarter alone downgrades totalled $391.5 billion or 10.6% of market volume.’
Overall, downgrades affected 9.3% ($279.5 billion) of investment grade volume in the fourth quarter while upgrades affected 1.5% ($45.3 billion). On the speculative grade front, the effects of negative and positive changes were 16.8% ($112 billion) and 1.2% ($8.2 billion), respectively.
For the full year, downgrades and upgrades affected 21.7% ($667.5 billion) and 4.0% ($121.8 billion) of investment grade bonds, respectively, and 34.2% ($224.4 billion) and 11.4% ($74.4 billion) of speculative grade bonds.
Don Mecoy
Business Writer
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Leave a comment