Press Release
KBRA Releases Research – KBRA’s Global Rating Stability and Transition Study: 2011-2023
31 May 2024 | New York
KBRA releases a report examining the stability of KBRA’s ratings and how those ratings transitioned over 1-year, 3-year, 5-year, and lifetime time horizons between 2011 and 2023. The ratings universe used in this study includes both published and unpublished long-term credit ratings (LTCR) assigned across all geographical regions, which are assigned to issuers, transactions, and securities using the same rating scale.
Key Takeaways
- KBRA’s ratings have generally performed in accordance with their definitions, with investment-grade (IG) rated securities (BBB- or higher) exhibiting greater ratings stability than those rated non-investment grade (non-IG). For example, over 99.4% of KBRA-rated securities initially assigned a AAA remained AAA over a 1-year, 3-year, 5-year, and lifetime window.
- Regardless of the observation window, IG rated securities exhibited greater than 95.6% stability, with high investment-grade (high-IG) rated securities (A- and higher) having a stability ratio of over 97.7%.
- Meanwhile, non-IG securities were stable 91.4% of the time over a 1-year window, 83.6% over a 3-year window, 73.2% over a 5-year window, and 89.6% over the ratings’ lifetime window. The greater “instability” of non-IG ratings relative to IG ratings is to be expected, given the speculative nature of issuers and securities rated below BBB-.
- Lifetime rating transitions were overwhelmingly positive, as upgrades outpaced downgrades by 4.5x. Furthermore, 82.6% of assigned ratings have been stable over their lifetime.
Click here to view the report.