May 14, 2020 - Economy & Business

Fitch expects record ratings downgrades in 2020

Dion Rabouin, author of Markets

Illustration: Rebecca Zisser/Axios

Fitch is expecting to cut the ratings on a record high number of companies this year as the pace of downgrades has "dramatically increased, owing to the economic crisis caused by the coronavirus pandemic," analysts note in a recent report.

The state of play: After just 58 downgrades in the first 10 weeks of 2020, there have been an additional 347 corporate and financial institution issuers downgraded for a total of 405 through the end of April.

  • There were a total of 1,068 negative rating actions taken in corporate and financial institutions during that time.
  • And though downgrades accounted for less than 40% of the negative actions, the increased level of negative rating outlooks "signal more downgrades are likely during the remainder of 2020 and into 2021," per the report.

Why it matters: Lower credit ratings make it more expensive for companies to borrow money and can lead to bankruptcy and insolvency for some firms.

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