For the first time since 1998 corporate debt upgrades outnumbered downgrades last year. A record 39 companies regained investment grade status, dubbed rising stars by Fidelity, as companies repaired their balance sheets and the outlook for corporate earnings improved.
BskyB and Vivendi Universal were among recovering companies in the European market, both of which were marked down to sub-investment grade status by Fidelity in 2003.
The anticipated upgrade for Vivendi Universal led to the spread, the extra yield over government debt – narrowing by 85 points between January 2004 and its upgrade in June 2004. Since that time spreads have narrowed an additional 68 points.