Global credit quality improved in second quarter, Moody's says

New York, July 18 - Credit quality improved during the second quarter, with upgrades "strongly" outpacing downgrades in Europe, Latin America and the Asia-Pacific region, Moody's Investors Service said.

Positive and negative rating actions were "fairly balanced" in North America.

Overall, the ratio of upgrades to downgrades in the quarter was 1.53, improved from 1.44 for the first quarter, Moody's said in a release Monday drawing on its quarterly analysis of ratings actions, reviews and outlooks.

However the rating agency said part of the improvement is due to its application of its joint default analysis to government-related issuers in Europe for the first time.

In Europe 5.4% of issuers were upgraded during the quarter, more than half due to the new analysis, compared to 1.9% that were downgraded.

For the Asia-Pacific region, 5% of issuers were raised while 2.5% saw their ratings reduced.

In Latin America, 4.4% of issuers were upgraded and 1.1% lowered.

The strongest upgrade performance was in the Middle East and Africa, with 10.5% of issuers raised and no downgrades.

For North America, the figures for upgrade and downgrade were the same at 3.3%.

Despite the positive results for the three months, at the end of the second quarter 3.4% of issuers were on review for downgrade compared to 2.2% on review for upgrade. For North America, the picture is more negative at 4.4% on review for downgrade and 1.8% on review for upgrade.

Moody's said those figures suggest improvements in credit quality "may moderate" over the coming quarters.

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