Fitch: Sovereign Ratings Drift Higher Despite Uneven Growth

Fitch Ratings says 2014 was characterized by uneven growth in the major advanced economies and persistent weakness among leading emerging markets. Improved growth in the U.S. and the UK stood in marked contrast to faltering expansion in the Eurozone. Therefore, 2014 sovereign rating activity was mixed on the year with downgrades trailing upgrades modestly by a margin of 0.8 to 1, according to a new Fitch report.

Sovereign downgrades trailed upgrades for the first time since 2011. The share of sovereigns downgraded - 9.4% and upgraded - 11.3% contracted from 2013's 15.5% and 11.7%, respectively.

Mixed signals emanated from developed markets (DMs), with both France and Bermuda downgraded, while Spain and Ireland were upgraded. Emerging market (EM) downgrades divided almost evenly between EMEA and LATAM, with each region reflecting economic and political concerns. Emerging markets downgrades (8) aligned closely with upgrades (9) by a slim margin of 0.9 to 1, and developed market sovereigns downgraded (2) were in line with those upgraded (3).

Argentina recorded the sole sovereign foreign currency default for 2014 when it was unable to cure a missed payment. The 2014 sovereign long-term foreign currency default rate was 0.94%.

This new study provides data and analysis on the performance of Fitch's sovereign ratings in 2014 and over the long term, capturing the period 1995-2014. The report provides summary statistics on the year's key sovereign rating trends.