2018 Annual U.S. Public Finance Default Study And Rating Transitions

Source: S&P Global Ratings, May 31, 2019
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– After rising for three straight years, the number of U.S. public finance (USPF) defaults fell to one in 2018 from 20 in 2017.
– In 2018, S&P Global Ratings raised its ratings on 1,427 USPF bonds and lowered 684.
– Local government, state government, utilities, and transportation had more upgrades than downgrades in 2018.
– Housing, higher education, health care, and charter schools had more downgrades than upgrades in 2018: This was the third consecutive year of negative rating trends for health care and housing and the eighth for charter schools.
– USPF ratings performance has been consistent with historical default trends, even at different time horizons. From 1986-2018, the one-, three-, five-, and 10-year average Gini coefficients were 94%, 87%, 81%, and 74%, respectively, when excluding housing. Gini values including housing were not as strong but still stable, with a one-year coefficient of 87%.