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Rising instability in corporate ratings, says Moody’s

An increasing number of corporate upgrades has affected the stability of Moody's corporate bond ratings, according to the rating agency. Three-hundred and twenty corporates experienced a rating action in the third quarter of 2004, compared to 248 in the same period last year ? on an annualized basis that's an increase from 18.2% to 22.6% in the share of corporates experiencing a rating action. The number of firms with excessive rating actions ? more than two rating notches ? has increased to 92 from 80 in the third quarter of last year.

Of the 341 rating actions undertaken by Moody's (some corporates experienced more than one action), 205 were preceded by rating reviews (60%) and 47 were preceded by negative or positive outlooks (14%).

Figures for the third quarter show Moody's ?accuracy rating' standing at 93.1%: this rating measures the link between Moody's ratings and any subsequent changes.

For more information on the ratings process at corporates see CF's October cover story by Simon Crompton.

Please forward any thoughts/comments on the story to: scrompton@euromoneyplc.com

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