Although rating upgrades increased their share of all Moody's Investors Services' rating revisions in the third quarter of 2014, Moody's expects there to be more downgrades than upgrades throughout the remainder of the year.
Moody's made 217 rating revisions in the third quarter of 2014, with 18, or 37.3 percent of all revisions being upgrades.
"After dropping in the second quarter, upgrades have resumed their encouraging trend of becoming a greater share of all rating actions, largely as a result of an improving economy and strong fiscal management," said Mark Lazarus, a Moody's analyst.
In the first three quarters of this year, Moody's has made 269 upgrades, which is 41 percent more upgrades than occurred in all of 2013. Excluding the upgrades that were made as a result of Moody's revision of its U.S. local government GO methodology, the number of upgrades in the first three quarters of 2014 is equal to 91 percent of all those in 2013, according to the report.
Even with the improving trends, Moody's expects a higher proportion of downgrades to continue for the remainder of the year, as lagging economic trends in certain regions will continue to put pressure on some local governments. In addition, the nonprofit healthcare sector will have revenue pressures from limited Medicare increases under the Patient Protection and Affordable Care Act, according to the report.
"Looking ahead, while downgrades will continue to outpace upgrades, the gap between the actions will likely continue to close," said Mr. Lazarus.
More articles on healthcare finance:
CHS reports strong financial results for Q3: 5 things to know
CMS releases final 2015 payment rules for Medicare: 10 things to know
For-profit stock report: Week of Oct. 27-31