EMEA Corporate Credit Ratings Outlook Not To Stabilize Until Mid-2010: Fitch

Sponsored Links

Fitch Ratings in a report said even though the economic downturn may be over, the stabilization of corporate credit rating outlooks is not expected until mid-2010 in Europe, the Middle East and Africa (EMEA).

"Abundant access to capital markets liquidity has protected large investment grade issuers from default in an otherwise searing recession, but corporate fundamentals have yet to improve - explaining the current record high average of outlooks with a negative bias", Fitch said.

John Hatton, Fitch Group's credit officer for the EMEA corporates said the next six months would be a critical period for assessing the rating outlook stabilizations. The firm expects stabilization of the EMEA companies' actual financial fortunes to take well into 2011 in many cases. Assuming the recovery remains on a weakly positive trajectory, Fitch believes that rating outlook stabilization will still likely lead external evidence of sector recovery by an average of 6 to 9 months.

The report also highlights the further downside risk to corporate creditworthiness from any further downturn in macroeconomic conditions, including a double-dip recession, or further disturbances to the financial system.

In a separate report published on October 13, Fitch said the stabilization of corporate performance and rating outlooks in the Asia-Pacific regions would outpace those in other geographical regions. The firm said for those sectors where negative outlooks currently remain in place, it anticipates stabilization of the outlooks by mid-2010, although it notes that actual recovery in operating performance will lag outlook stabilization by between two and four quarters.

(Market News Provided by RTTNews)