As Sovereign Default Concerns Explode, The Outlook For Corporate Bonds Has Been Quietly Improving

According to credit rating data form Fitch Research, the outlook for corporate bonds has been improving. Thus corporate creditworthiness is trending in the exact opposite direction of many sovereign nations. The falling red bars, from mid-2009, reflect fewer downgrades. Meanwhile, the rising blue bars represent rising credit upgrades.


Here’s a close-up of the recent improvement for both Industrials and Financials:


High yield default rates remain high, but they are already lower than experienced during 2001 and 2002. Creditworthiness appears to be improving in this space as well. Even high-yield ‘junk bonds’ are moving in the opposite direction of nations like Greece:


(Via Fitch Research, 2010 Credit Markets Symposium, 15 April 2010)

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