While the trend for ratings on nonfinancial corporate issuers turned slightly better in the second half of 2016, the volatility in market conditions makes it uncertain whether the improvement will continue in 2017. The impact of the U.K.'s negotiated exit from the EU (Brexit) and the policies of incoming U.S. President Donald Trump are among the unknowns in 2017.
S&P Global Ratings' net outlook bias on its nonfinancial corporate issuer pool improved to a negative 13% as of Dec. 31, 2016, from a negative 15% figure six months previously. Improving outlooks on the emerging markets in Asia-Pacific and Latin America provided the most momentum, while the situation in the developed markets of North America and Western Europe has changed little. Similarly, global corporate creditworthiness has steadied, with the average long-term corporate credit rating up marginally, to between 'BB+' and 'BB' after having fallen steadily since 2008.
S&P Global Ratings calculates the net outlook bias by deducting the positive CreditWatch and outlooks from the negative, and expressing the figure as a percentage of total issuers.
- At end-2016, 19% of global nonfinancial corporate issuers were on negative CreditWatch or outlook which, after netting against those on positive, returned a net negative of 13%.
- While the 13% is an improvement over a negative 15% at end-June 2016, volatility in recent market conditions makes it uncertain whether the trend will endure.
- Similarly, global corporate creditworthiness has slightly improved, with the average long-term credit rating between 'BB+' and 'BB'.
- There is a stark regional divergence in the net negative bias. Just 1 in 20 Western European issuers is negative compared with 1 in 8 for Asia-Pacific and North America, and 2 in 5 for Latin America.