MARC Ratings today published its 2023 Annual Corporate Default and Ratings Transition Study which tracks corporate ratings assigned by the rating agency since its inception in 1996 through 2023.

In 2023, MARC Ratings’ corporate portfolio recorded four rating downgrades and three upgrades, compared to two downgrades and two upgrades in the preceding year. Hence, the annual corporate downgrade rate rose to 4.4% (2022: 2.2%), while the upgrade rate increased to 3.3% (2022: 2.2%). Meanwhile, MARC Ratings’ corporate portfolio recorded no rating default in 2023, in contrast to the two rating defaults in 2022. This led to an improved rating drift at -1.1% (2022: -2.2%), suggesting an overall improvement in credit quality.

On account of increased rating migrations in 2023, the rating stability rate edged lower to 92.3% (2022: 93.3%) but remained above its long-term (2000-2023) average of 87.9%. The steady trend for the rating stability rate is partly attributable to the prevalence of highly-rated issuers within MARC Ratings’ corporate portfolio, which typically demonstrate stronger business resilience during challenging times.

Furthermore, MARC Ratings demonstrated proficiency in predicting defaults and consistently exhibited effectiveness in ranking credit risk through its ratings. For the 1998-2023 period, MARC Ratings’ one-year rating accuracy ratio improved to 74.4% (1998-2022 period: 73.6%). This suggests an improvement in MARC Ratings’ capability to assess relative default risk effectively.

We anticipate stable ratings trajectories for corporates in MARC Ratings’ rating universe, on the back of improved domestic economic growth and stable monetary conditions.