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Asian corporates lead way in global credit quality

Global credit quality showed significant improvement during the final quarter of 2004 as credit rating upgrades outnumbered downgrades by nearly two to one, Moody's Investors Service says in its latest quarterly update on rating actions, reviews and outlooks. In all, there were roughly 1.9 upgrades for every downgrade globally during the fourth quarter, an increase from roughly 1.4 upgrades per downgrade in the previous quarter, Moody's says.

The Asia-Pacific region led the way in improved ratings, according to Moody's. In the region, approximately 25% of all Moody's rated issuers were upgraded during the quarter.

More issuers were also upgraded than downgraded in both north America and Europe, Moody's says. In north America, approximately 7% of issuers were upgraded, compared to 5.6% being downgraded, while in Europe 6.5% were upgraded compared to 2.6% being downgraded. Globally 8.2% of issuers were upgraded.

Looking ahead, Moody's senior analyst Praveen Varma says that average credit quality is likely to be more stable over the next quarter, as only 2.4% of issuers are on review for upgrade and 2.7% are on review for downgrade.

"Prospects for further upgrades in the Asia-Pacific region remain strong, however" says Varma, "as roughly 7% of issuers in the region remain on review for upgrade."

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