February Credit Update: Upgrades and Downgrades are Balanced

Credit Benchmark has published the latest monthly credit consensus data (from January 2018), with 20 contributor banks now providing bank-sourced credit views (CBCs^*) on almost 14,500 separate legal entities over the past 12 months.

Monthly consensus upgrades and downgrades:

• 265 obligors improved their credit standing by at least one notch.
• 254 obligors deteriorated.
• 63 moved more than one notch.
• The frequency of upgrades and downgrades has decreased.

This compares with the previous month, which showed improvements across 449 obligors and deterioration across 324, with 78 moving by more than one notch.

Industries:

• Upgrades dominate downgrades in four out of ten reported industries; and three industries are balanced.
• The improvements in credit quality are:
  • Basic Materials with 13 upgrades and 11 downgrades.
  • Health Care with seven upgrades and six downgrades.
  • Oil and Gas with 27 upgrades and 24 downgrades.
  • Financials with 99 upgrades and 85 downgrades.

• The deteriorations in credit quality include:
  • Consumer Goods with 14 upgrades and 18 downgrades.
  • Consumer Services with 21 upgrades and 22 downgrades.
  • Utilities with six upgrades and eight downgrades.

• The number of upgrades and downgrades is balanced in Industrials (24), Technology (five), and Telecommunications (three).

* CBC = Credit Benchmark Consensus; a 21-category classification which is explicitly linked to probability of default estimates sourced from major banks. A CBC of bbb+ is broadly comparable with BBB+ from S&P and Fitch or Baa1 from Moody’s.

Disclaimer: Credit Benchmark does not solicit any action based upon this report, which is not to be construed as an invitation to buy or sell any security or financial instrument. This report is not intended to provide personal investment advice and it does not take into account the investment objectives, financial situation and the particular needs of a particular person who may read this report.