Apr 11, 2019

S&P's ratings downgrade ratio is the worst in 3 years

The New York Stock Exchange. Photo: Johannes Eisele/AFP/Getty Images

The ratio of U.S. companies that S&P Global has downgraded to the number it has upgraded this quarter is the highest on an annualized basis since 2016, the ratings agency reported this week.

The big picture: "While 2018 generally showed benign rating activity, 2019 has already seen pronounced downgrades, especially at speculative-grade rating categories, while downgrades among higher-rated issuers remain muted," said Diane Vazza, head of S&P Global Fixed Income Research, in a press release.

By the numbers: Globally, S&P downgraded 173 corporate issuers and upgraded 67 in the first quarter, noting the high downgrade ratio in the U.S. and emerging markets.

  • S&P's net downgrade rate (number of total downgrades minus upgrades) is at the worst level on an annualized basis since 2016, the agency said in a release.
  • "Many of the global risks seen in 2018 are likely to continue in 2019, including slowing global economic growth, fading fiscal stimulus, moderately elevated interest rates, and persistent equity volatility," Vazza said.

What to watch: S&P also noted that companies in the consumer sector are particularly vulnerable to downgrades, with weak ratings and "high negative bias, which are poised to continue deteriorating this year."

Go deeper: Investors aren't punishing companies for bad guidance

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In photos: How coronavirus is impacting cities around the world

Revellers take part in the "Plague Doctors Procession" in Venice on Tuesday night during the usual period of the Carnival festivities, most of which have been cancelled following the coronavirus outbreak in northern Italy. Photo: Andrea Pattaro/AFP via Getty Images

The novel coronavirus has spread from China to infect people in more than 40 countries and territories around the world, killing over 2,700 people.

The big picture: Most of the 80,000 COVID-19 infections have occurred in mainland China. But cases are starting to surge elsewhere. By Wednesday morning, the worst affected countries outside China were South Korea (1,146), where a U.S. soldier tested positive to the virus, Italy (332), Japan (170), Iran (95) and Singapore (91). Just Tuesday, new cases were confirmed in Switzerland, Croatia and Algeria.

See photosArrow2 hours ago - World

Debate night: Candidates' last face-off before Super Tuesday

Sanders, Biden, Klobuchar and Steyer in South Carolina on Feb. 25. Photo: Jim Watson/AFP via Getty Images

Sen. Bernie Sanders wanted to keep his momentum after winning contests in New Hampshire and Nevada, while former Vice President Joe Biden hoped to keep his own campaign alive. The other five candidates were just trying to hang on.

What's happening: Seven contenders for the Democratic presidential nomination were in Charleston, South Carolina, for the tenth debate, just days before the South Carolina primary and a week before Super Tuesday. They spoke, sometimes over each other, about health care, Russian interference in the election, foreign policy the economy, gun control, marijuana, education, and race.

Go deeperArrowUpdated 5 hours ago - Politics & Policy

4 takeaways from the South Carolina debate

Former Vice President Joe Biden, right, makes a point during Tuesday's Democratic presidential debate, while Vermont Sen. Bernie Sanders listens. Photo: Win McNamee/Getty Images

The 10th Democratic debate was billed as the most consequential of the primary thus far, but Tuesday night's high-stakes affair was at times awkward and unfocused as moderators struggled to rein in candidates desperate to make one last splash before Saturday's primary in South Carolina and Super Tuesday.

The big picture: After cementing himself as the Democratic favorite with a sweeping win in Nevada, Sen. Bernie Sanders came under fire as the front-runner for the first time on the debate stage. Former New York Mayor Michael Bloomberg, who will be on the ballot for the first time next Tuesday, was a progressive foil once again, but he appeared more prepared after taking a drubbing at the Nevada debate.