Wednesday, July 2, 2025

DBRS Morningstar: 2020 Corporate Downgrade Ratio Worst Since 2008 Financial Crisis

Numerous corporations around the world found themselves the subject of significant credit downgrades in 2020, as the economic impact of the pandemic become more severe.

According to DBRS Morningstar, the world’s fourth largest credit ratings agency, the downgrade-to-upgrade ratio soared to 4.67x in 2020, significantly outpacing the 2008 measure of 3.08x in 2008, and nearly reaching the 5.39x ratio recorded in 2009. The downgrade-to-upgrade ratio measures the contrast between the number of credit rating downgrades and upgrades for corporate issuers analyzed by DBRS.

As DBRS Morningstar notes, a ratio exceeding 4.00x is common for a recession, such as the global economic downturn stemming from the Covid-19 pandemic. Over the past 15 years, the average ratio remained around approximately 3.00x. Last year, however, the ratings agency reported a total of 70 credit downgrades, compared to the 74 downgrades issued in 2008 and the 97 reported in 2009.

The majority of the downgrades were concentrated in the oil and gas sector, as approximately 40% of rated issuers saw their credit ratings decline in 2020. The non-food retail merchandise and the automotive sectors also were the subject of significant downgrades, both exceeding 30%.

The ratings agency anticipates the downgrade-to-upgrade ratio will even out in 2021, but will still exceed the 15-year average of 3.00x due to lingering uncertainty surrounding the trajectory of the pandemic crisis. In addition, many of the sectors that were hit the hardest as a result of the pandemic will likely continue to be susceptible to future credit rating downgrades.


Information for this briefing was found via DBRS Morningstar and Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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