The first quarter of 2009 also saw another unwelcome milestone as the share of U.S. corporate bonds rated ‘AAA’ fell below 1% of market volume while the share of ‘CCC’ rated issues moved up again to a new high of 6.8%. In total, the ‘AAA’ category saw $176.2 billion in downgrades while the ‘AA’ category featured an additional $142.1 billion.
Overall, downgrades affected 14.5% ($426.4 billion) of investment grade U.S. bond market volume in the first quarter while upgrades affected 0.3% ($9.1 billion). On the speculative grade front, the effects of negative and positive changes were 14.8% ($96 billion) and 1.7% ($10.8 billion), respectively.
A positive development in the first quarter was a strong rebound in issuance, tallying $184.9 billion following dismal third- and fourth-quarter 2008 activity of just $80.8 billion and $74.4 billion, respectively. While an impressive turnaround, this strength came from highly rated, defensive industrial names. Financial and speculative grade issuance remained very low.
The new report, titled ‘U.S. Corporate Bond Market: A Review of First-Quarter 2009 Rating and Issuance Activity’, offers additional details on issuance patterns, rating activity by broad market sector and industry, and bonds coming due. The report is available on the Fitch Ratings web site at www.fitchratings.com under ‘Credit Market Research’.
The par value of U.S. corporate bonds affected by downgrades hit a high of $522.4 billion 2009/05/14