Downgrades posted a modest contraction quarter over quarter, affecting 2.7% of global corporate issuers down from 3.1% in the second quarter. Upgrades, however, slipped to 2% of ratings from 3.8% in the prior quarter.
The share of industrial downgrades mirrored the share of upgrades -- 2.4% -- in the third quarter, both contracting from second-quarter rates of 2.8% and 4.4%, respectively. Financial entities' third-quarter downgrades affected 3.1% of issuers and upgrades 1.6%, versus 3.5% and 3.2%, respectively, in the second quarter.
The rating drift remained positive at the speculative grade level, but deteriorated at the investment grade level. The third-quarter speculative grade downgrade rate, (2.7%), trailed the upgrade rate (3.9%), while the investment grade downgrade rate (2.8%) topped the upgrade rate (1.2%).
Rating trends remained positive among emerging market issuers in the third quarter while their developed market counterparts saw the margin of downgrades to upgrades widen. Emerging market downgrades lagged upgrades 0.4 to 1 versus developed markets' results of downgrades outpacing upgrades 2.1 to 1.
The distribution of Fitch's global corporate issuers carrying a Negative Outlook remained steady quarter to quarter at 7%, while the share of issuers assigned a Positive Outlook reached 8%, an improvement from the previous quarter's 7%.