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COMMENTS

Credit Trends: U.S. Public Finance Credit Quality Makes Smallest Gain Since 2021

COMMENTS

Default, Transition, and Recovery: 2024 Annual U.S. Public Finance Default And Rating Transition Study

COMMENTS

Default, Transition, and Recovery: 2024 Annual U.S. Corporate Default And Rating Transition Study

COMMENTS

Global Financing Conditions: Peak Uncertainty Leaves A Range Of Projections For Issuance

COMMENTS

Credit Trends: Global Refinancing: Uncertain Conditions Heighten Maturity Risk


Credit Trends: U.S. Public Finance Credit Quality Makes Smallest Gain Since 2021

The credit quality of USPF obligors improved in the first quarter of 2024, though to the lowest degree since the second quarter of 2021. Upgrades totaled 153 (149 nonhousing and four housing) in first-quarter 2024, down from 357 (347 nonhousing and 10 housing) in the prior quarter (see charts 1 and 2) while downgrades totaled 79 (76 nonhousing and three housing), up slightly from 77 (73 nonhousing and four housing). There were two upgrades for every downgrade for nonhousing, while housing saw 1.3 upgrades for every downgrade.

Chart 1

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Chart 2

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Fiscal Performance Drove 30% Of Total Downgrades And 32% Of Total Upgrades

In first-quarter 2024, financial conditions were a mixed picture for USPF issuers. Eroded financial conditions were the most common reason for negative rating actions, totaling 38, and improved financial conditions were the most common reason for positive rating actions, totaling 97 (see chart 3).

Chart 3

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There were two defaults in the first quarter when two housing issues related to Great Lakes Senior Living Communities in Arizona defaulted after failing to pay bond principal.

Rating Distributions

Only 1.8% of USPF nonhousing ratings were speculative-grade ('BB+' and below) at the end of the first quarter of 2024 (see table 1), compared with 1.5% for housing.

A large majority (nearly 86.8%) of USPF issuers were concentrated in the 'AA' or 'A' categories, as the ratings on these issuers strongly correlate with that on the sovereign, which S&P Global Ratings affirmed at 'AA+' with a stable outlook in March (see "U.S. ‘AA+/A-1+’ Sovereign Ratings Affirmed; Outlook Remains Stable," March 27, 2024). Excluding charter schools, the majority of issuers in all industries are concentrated in investment-grade rating categories.

Table 1

Rating distribution (as of March 31, 2024)
Number of ratings
USPF ex. housing Tax secured Appropriation Utilities Health care Higher education Transportation Charter schools Housing
AAA 1,129 828 65 189 0 44 3 0 396
AA 9,145 5,506 2,308 951 107 196 77 0 1,699
A 9,418 6,000 1,770 977 196 312 162 1 162
BBB 1,108 428 108 152 91 186 26 117 61
BB 339 42 43 11 29 58 1 155 13
B 29 3 9 1 4 7 0 5 14
CCC/C 8 0 1 0 3 3 1 0 8
Totals 21,176 12,807 4,304 2,281 430 806 270 278 2,353
(%)
AAA 5.33 6.47 1.51 8.29 0.00 5.46 1.11 0.00 16.83
AA 43.19 42.99 53.62 41.69 24.88 24.32 28.52 0.00 72.21
A 44.47 46.85 41.12 42.83 45.58 38.71 60.00 0.36 6.88
BBB 5.23 3.34 2.51 6.66 21.16 23.08 9.63 42.09 2.59
BB 1.60 0.33 1.00 0.48 6.74 7.20 0.37 55.76 0.55
B 0.14 0.02 0.21 0.04 0.93 0.87 0.00 1.80 0.59
CCC/C 0.04 0.00 0.02 0.00 0.70 0.37 0.37 0.00 0.34
USPF--U.S. public finance. Source: S&P Global Ratings Credit Research & Insights.

Large Rating Movements Trended Slightly Negative

There were 38 large rating movements (those of two notches or more) in the first quarter, with 16 upgrades and 22 downgrades (see table 2). There were also six obligors that moved from investment-grade to speculative-grade in the quarter, against only three that moved from speculative-grade to investment-grade.

Table 2

Multiple notch rating changes (Q1 2024)
Notch change* Notches Tax secured Appropriation Utilities Health care Transportation Housing Charter schools Higher education Grand total
3 3 3 1 4
2 2 5 8 1 1 2 1 18
-2 -2 6 1 4 1 1 13
-3 -3 1 2 3
Total 0 14 9 7 2 2 2 1 1 38
Data as of March 31, 2024. *Negative numbers indicate downgrades. Q--Quarter. Source: S&P Global Ratings Credit Research & Insights.

Q1 2024 Rating Actions

In the first quarter of 2024, transportation had the largest improvement in credit quality, with 3.3% of all transportation ratings raised (see chart 4). On the other hand, health care had the largest percentage of ratings lowered, with just over 2.3%.

Chart 4

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Chart 5

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Chart 6

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Chart 7

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Chart 8

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Chart 9

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Chart 10

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Appendix

Table 3

Q1 2024 upgrades and downgrades
Sector Upgrades Downgrades Defaulted
Total USPF ex. housing 149 76 0
State and local* 118 36 0
Tax secured 88 31 0
Appropriation 30 5 0
Utilities 11 16 0
Health care 3 10 0
Higher education 5 6 0
Charter schools 3 8 0
Transportation 9 0 0
Housing 4 1 2
Data as of March 31, 2024. *Includes tax-secured and appropriation securities. USPF--U.S. public finance. Q--Quarter. Source: S&P Global Ratings Credit Research & insights.

Table 4

Upgrade/downgrade history*
USPF ex. housing Tax secured Appropriation Utilities Health care Higher education Transportation Charter schools§ Housing†
Up Down Up Down Up Down Up Down Up Down Up Down Up Down Up Down Up Down
Jan. 01, 2001 153 38 61 5 64 1 16 9 5 21 5 2 2 0 0 0 6 7
Apr. 01, 2001 740 106 83 3 629 67 23 4 1 20 3 12 1 0 0 0 38 11
Jul. 01, 2001 126 47 49 4 42 3 13 5 2 22 5 5 15 8 0 0 29 14
Oct. 01, 2001 99 14 56 3 20 4 11 2 3 4 7 1 2 0 0 0 25 8
Jan. 01, 2002 176 38 99 5 45 1 16 7 4 6 7 5 5 14 0 0 3 7
Apr. 01, 2002 108 105 59 9 21 64 20 6 1 11 1 5 6 10 0 0 3 25
Jul. 01, 2002 72 38 39 2 10 10 19 3 2 18 1 1 1 4 0 0 0 17
Oct. 01, 2002 103 127 57 13 26 72 12 15 4 19 2 7 2 1 0 0 6 18
Jan. 01, 2003 84 66 41 5 18 33 10 2 5 17 7 8 3 1 0 0 6 19
Apr. 01, 2003 87 46 52 10 6 1 13 1 5 21 6 7 5 5 0 1 4 24
Jul. 01, 2003 80 134 45 7 18 79 12 6 3 11 2 29 0 2 0 0 10 27
Oct. 01, 2003 126 93 55 15 27 28 17 7 11 30 16 8 0 5 0 0 24 9
Jan. 01, 2004 105 98 63 16 8 58 12 3 14 18 3 3 5 0 0 0 24 6
Apr. 01, 2004 97 66 53 11 17 34 16 8 8 9 2 3 1 1 0 0 2 11
Jul. 01, 2004 188 130 47 13 102 100 31 1 5 10 1 4 1 2 1 0 25 20
Oct. 01, 2004 122 58 65 10 22 22 19 9 9 14 6 3 1 0 0 0 11 10
Jan. 01, 2005 153 35 63 11 39 13 15 3 13 7 22 1 1 0 0 0 78 12
Apr. 01, 2005 109 66 53 10 25 42 8 2 16 10 4 2 3 0 0 0 5 110
Jul. 01, 2005 214 39 52 13 132 7 12 3 12 8 6 4 0 4 0 0 30 11
Oct. 01, 2005 153 111 75 44 24 23 22 9 20 18 10 8 2 7 0 2 13 42
Jan. 01, 2006 114 47 38 9 47 13 10 3 11 14 7 6 1 1 0 1 12 9
Apr. 01, 2006 251 22 68 10 144 1 14 2 13 6 9 3 3 0 0 0 30 8
Jul. 01, 2006 405 29 338 8 18 1 25 2 13 18 8 0 3 0 0 0 63 13
Oct. 01, 2006 194 38 98 13 37 5 22 6 12 10 13 3 12 0 0 1 34 3
Jan. 01, 2007 177 26 97 11 51 0 21 2 4 11 1 1 3 0 0 1 49 1
Apr. 01, 2007 178 56 74 28 62 11 24 2 9 8 8 5 1 2 0 0 9 4
Jul. 01, 2007 161 24 94 3 38 3 10 2 7 15 6 0 5 1 1 0 26 11
Oct. 01, 2007 165 49 75 13 33 8 26 1 10 19 15 4 4 1 2 3 12 10
Jan. 01, 2008 237 36 127 10 47 2 41 4 7 18 9 1 6 1 0 0 6 16
Apr. 01, 2008 634 31 419 7 103 2 96 1 5 20 9 0 1 1 1 0 7 63
Jul. 01, 2008 594 31 299 6 232 1 42 2 4 21 12 0 5 1 0 0 13 36
Oct. 01, 2008 668 44 291 7 60 4 298 0 7 28 5 4 6 1 1 0 31 30
Jan. 01, 2009 758 213 525 18 140 152 81 5 4 31 1 3 3 4 4 0 23 152
Apr. 01, 2009 615 83 331 16 116 41 150 1 5 22 6 3 7 0 0 0 26 77
Jul. 01, 2009 403 32 226 4 90 4 67 8 4 11 10 1 6 4 0 0 8 33
Oct. 01, 2009 453 60 315 12 77 28 33 1 12 12 13 3 1 4 2 0 9 32
Jan. 01, 2010 683 279 523 47 88 209 58 8 8 10 2 2 2 3 2 0 7 85
Apr. 01, 2010 576 93 444 54 77 16 39 3 8 16 6 2 1 2 1 0 11 42
Jul. 01, 2010 255 40 158 18 34 2 43 4 7 10 11 3 1 3 1 0 8 61
Oct. 01, 2010 238 59 148 26 18 17 30 3 19 7 17 1 4 4 2 1 33 72
Jan. 01, 2011 444 300 243 68 105 211 55 7 13 2 16 5 6 4 6 3 22 15
Apr. 01, 2011 189 96 99 58 33 18 25 6 22 9 2 3 7 1 1 1 5 40
Jul. 01, 2011 94 126 38 53 9 49 28 4 16 12 2 5 0 2 1 1 13 1311
Oct. 01, 2011 75 110 23 54 3 11 29 18 9 14 9 6 1 3 1 4 11 34
Jan. 01, 2012 126 91 43 40 24 22 44 12 11 11 2 4 2 0 0 2 8 59
Apr. 01, 2012 177 139 79 68 26 39 45 14 13 8 9 7 5 0 0 3 9 9
Jul. 01, 2012 140 150 66 79 27 39 27 8 14 11 2 7 3 0 1 6 3 40
Oct. 01, 2012 136 87 72 44 20 12 28 10 6 11 4 6 6 1 0 3 18 12
Jan. 01, 2013 200 128 83 88 85 15 19 11 9 6 4 3 0 1 0 4 12 12
Apr. 01, 2013 203 96 110 45 37 19 27 8 18 13 7 6 4 1 0 4 13 27
Jul. 01, 2013 274 119 162 49 71 20 24 16 7 10 5 10 5 3 0 11 10 12
Oct. 01, 2013 764 169 543 64 172 60 31 5 5 20 9 11 4 1 0 8 34 75
Jan. 01, 2014 680 164 520 80 109 44 17 16 13 10 7 8 12 1 2 5 10 4
Apr. 01, 2014 588 286 449 89 84 142 32 10 12 18 8 21 3 0 0 6 16 10
Jul. 01, 2014 738 369 459 94 237 228 28 9 9 14 4 10 1 0 0 14 35 8
Oct. 01, 2014 279 82 117 40 124 7 22 12 8 8 1 8 7 0 0 7 77 31
Jan. 01, 2015 235 161 142 69 36 49 27 7 24 18 3 18 2 0 1 0 23 4
Apr. 01, 2015 272 139 141 61 64 33 34 12 21 15 5 11 5 1 2 5 10 3
Jul. 01, 2015 318 156 138 52 112 59 34 24 19 3 3 12 11 2 1 4 23 2
Oct. 01, 2015 229 109 137 52 17 18 37 19 19 10 4 5 14 1 1 4 8 2
Jan. 01, 2016 266 138 143 60 39 32 46 20 8 6 21 15 7 1 2 4 19 18
Apr. 01, 2016 236 155 117 54 26 43 52 17 9 15 22 15 9 2 1 9 20 43
Jul. 01, 2016 203 156 101 45 49 69 32 14 12 7 6 15 2 1 1 5 11 3
Oct. 01, 2016 222 268 105 49 29 161 51 28 9 11 19 13 5 1 4 5 14 9
Jan. 01, 2017 250 273 137 77 41 133 52 27 8 12 4 12 5 0 3 12 10 24
Apr. 01, 2017 228 120 99 67 91 21 13 6 11 4 1 19 7 0 6 3 9 9
Jul. 01, 2017 157 153 90 53 27 60 20 16 5 14 8 4 4 2 3 4 12 5
Oct. 01, 2017 235 115 145 65 45 20 22 6 7 7 8 8 5 2 3 7 7 7
Jan. 01, 2018 551 97 340 53 176 10 19 8 8 7 3 10 0 2 5 7 3 32
Apr. 01, 2018 310 168 175 75 78 61 19 13 15 9 2 6 15 0 6 4 6 42
Jul. 01, 2018 276 145 132 84 88 10 26 21 6 14 3 10 19 2 2 4 29 13
Oct. 01, 2018 231 156 133 97 54 29 20 13 6 8 1 6 17 0 0 3 21 24
Jan. 01, 2019 283 108 183 65 52 20 29 10 6 6 5 5 8 0 0 2 0 11
Apr. 01, 2019 261 115 171 57 42 15 24 22 10 7 6 7 7 5 1 2 8 30
Jul. 01, 2019 199 107 120 63 38 14 30 11 3 5 7 7 0 0 1 7 2 71
Oct. 01, 2019 216 114 130 69 38 5 26 17 4 7 4 14 10 0 4 2 5 31
Jan. 01, 2020 111 106 58 53 21 9 20 17 6 9 3 16 2 1 1 1 21 7
Apr. 01, 2020 7 171 4 91 0 33 3 9 0 13 0 14 0 7 0 4 2 43
Jul. 01, 2020 13 247 7 103 2 27 4 15 0 7 0 23 0 71 0 1 15 83
Oct. 01, 2020 30 313 11 69 2 168 10 15 1 6 1 20 4 28 1 7 24 39
Jan. 01, 2021 51 79 25 29 2 16 14 14 0 7 0 11 9 2 1 0 18 9
Apr. 01, 2021 105 74 59 28 15 19 20 16 1 3 5 5 1 1 4 2 4 6
Jul. 01, 2021 204 70 117 35 60 9 17 16 6 7 2 2 0 0 2 1 10 18
Oct. 01, 2021 156 56 81 25 17 5 16 10 13 5 7 6 21 1 1 4 5 15
Jan. 01, 2022 305 51 107 22 162 4 14 15 3 4 4 6 14 0 1 0 2 8
Apr. 01, 2022 183 63 93 38 43 5 15 5 8 8 6 7 12 0 6 0 4 2
Jul. 01, 2022 169 75 89 34 13 4 32 16 3 11 1 6 29 2 2 2 12 12
Oct. 01, 2022 166 62 81 24 26 5 22 11 3 10 11 10 23 1 0 1 55 3
Jan. 01, 2023 133 52 67 18 24 1 5 8 4 14 8 9 19 0 6 2 52 4
Apr. 01, 2023 403 70 132 28 226 8 21 9 3 8 6 14 14 0 1 3 61 9
Jul. 01, 2023 166 55 96 25 25 6 18 4 2 16 18 2 5 0 2 2 14 1
Oct. 01, 2023 347 73 235 31 79 6 17 7 4 21 9 4 2 1 1 3 10 4
Jan. 01, 2024 149 76 88 31 30 5 11 16 3 10 5 6 9 0 3 8 4 3
Data as of March 31, 2024. *Downgrades include defaults . §All active charter school ratings are included in this category. Prior ratings often were categorized as appropriation debt. †Only tracked annually prior to 2006. USPF--U.S. public finance. Source: S&P Global Ratings Credit Research & Insights

Related Research

This report does not constitute a rating action.

Credit Research & Insights:Nick W Kraemer, FRM, New York + 1 (212) 438 1698;
nick.kraemer@spglobal.com
Zev R Gurwitz, Albany + 1 (212) 438 7128;
zev.gurwitz@spglobal.com
Research Contributor:Lyndon Fernandes, CRISIL Global Analytical Center, an S&P affiliate, Mumbai

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