Fitch: U.S. Public Finance Upgrades Outpaced Downgrades in 2015 for the Second Time Since 2008

In 2015, U.S. public finance upgrades exceeded downgrades for only the second time since the beginning of the financial crisis, according to a new Fitch Ratings report.

'Stable economic growth spurred revenue growth and stability in the U.S. As a result, we saw a general trend towards stability as both upgrades and downgrades decreased year-over-year,' said Jessalynn Moro, Managing Director of U.S. Public Finance Group. 'That said Negative Rating Watches were up as of year-end, increasing to 16 from nine the year prior but still remain a small portion of the portfolio.'

Upgrades totaled 148 in 2015, down from 183 in 2014, representing 4.4% of all rating actions with a par value of $140.1 billion. There were 65 downgrades in 2015 versus 142 downgrades in 2014, representing 1.9% of all rating actions with a par value of $133.9 billion.

Despite downgrades decreasing 54%, notable credits were affected including Puerto Rico, Illinois and Chicago area credits.

The largest downgrade by par amount was the approximately $26.8 billion of Illinois general obligation (GO) bonds that were downgraded to 'BBB+' with a Stable Rating Outlook from 'A-' with a Negative Rating Outlook.

The upgrade of the state of California's GO bonds was the largest upgrade by par amount effecting approximately a $76.4 billion outstanding par amount. The upgrade was to 'A+' with a Stable Rating Outlook from 'A' with a Stable Rating Outlook.

In the fourth quarter of 2015 (4Q15) - for the seventh consecutive quarter - rating upgrades outnumbered downgrades. Downgrades were at its lowest since 1Q08, with nearly all related to the downgrade of Illinois and its associated debt.