NEW YORK, March 20 (Reuters) - Fitch Ratings on Wednesday said it issued more credit-rating cuts than hikes last year in America’s $3.7 trillion municipal market for a fourth straight year, but said a modest economic recovery was steadying the finances of government borrowers.
“For all U.S. public finance sectors in aggregate, both the number of upgrades and downgrades decreased in 2012 from 2011,” Fitch said in a report. “Modest recovery helped to stabilize credits ... and led to an improvement in income and sales tax revenues.”
Fitch said last year it issued 198 ratings downgrades, or 26 percent fewer than in 2011. The affected debt had a par value of $73 billion.
Rating hikes by Fitch fell 35 percent to 84 in 2012 from 130 the previous year. All 84 upgrades had a par value of $24.8 billion, Fitch said.
The rating agency’s analysts also had fewer negative ratings outlooks in place at year-end. Such outlooks often foreshadow rating cuts, which can sting prices of an issuer’s outstanding debt and make future borrowing more expensive.
”As of the end of 2012, there were 232 credits with a negative rating outlook. This number decreased from 306 in 2011, Fitch said. “There were 61 positive rating outlooks, down from 68 the previous year.”