The trend of credit quality improvement seen in Global Corporates continues, with net positive movement across the board this month. That said, the ratio difference in most industries and sectors is marginal, indicating a pattern of balance – though with an optimistic bent.
Corporates outperformed Financials by a slim margin, with an improvements to deteriorations ratio of 1.4:1, to Financials’ 1.3:1.
Among the industries, the best in class was Oil & Gas, with a ratio of 2.6 improvements for every deterioration. With oil and gas prices soaring as a result of the Russia-Ukraine conflict, companies are seeing record profits and a resultant healthy credit risk performance. Basic Materials followed by a distance, with a ratio of 1.7:1, with Healthcare close behind at 1.5:1 improvements to deteriorations. The rest of the industries maintained slim positive ratios of 1.3:1 or lower, with Technology and Utilities showing the comparatively lowest ratios, at 1.2:1 and 1.1:1 respectively.
The strong performance from Oil & Gas was evident at the sector level, with all three regions showing a heavily weighted bias towards improvement. US Oil & Gas led the pack at 3.8:1 improvements to deteriorations, followed by Canadian Oil & Gas at 3:1, and close behind was UK Oil & Gas at 2.9:1. US Corporates overall reflected this positive bias, with a ratio of 2.1:1, while UK Corporates had a weaker ratio at 1.1:1.
In the update, you will find:
Credit Benchmark will continue to provide regular reports on these migration rates. If you have any questions about the contents of this update, please get in touch.