Fitch 2016 Sector Outlooks Overview Tool Highlights More Negative Rating Prospects

Fitch Ratings says the prospects for ratings in 2016 are bleaker than a year ago with the number of sectors with negative rating outlooks outweighing positives by almost six to one based on the agency's 213 outlook reports. The increasing headwinds in many regions and segments pose further downside risk, as illustrated by sector outlooks showing an even greater negative bias at 10 to one. Collectively, the coming year is likely to see an increasing number of negative rating actions.

Rating outlooks indicate the direction in which a rating is likely to move over a one- to two-year period. The sector outlook indicates the underlying fundamental trend of asset prices in the industry as a whole, capturing the operating environment. The complete list of outlook reports is available in our 2016 Outlook Overview Tool, published today.

Overall, 66% of sector outlooks are stable but 27% are negative, up from 14% at the start of 2015. The drag from emerging markets is evident in the higher share of negative sector outlooks for this region at 32%. Sectors under pressure include:

-most oil and gas and related industries

-natural resources

-retail in Europe and China

-banking systems in many countries in Asia-Pacific, CIS, the Gulf countries as well as Canada

-UK, German and French life insurance

The Rating Outlook is Stable on 81% of sectors, unchanged on last year, reflecting the stability of Issuer Default Ratings. Negative Rating Outlooks apply to a wide range of corporate sectors, especially in EM regions, including oil and gas, basic materials, pharmaceuticals and tobacco. Sovereign regions with Negative Rating Outlooks include the Middle East and Africa.

Sectors with a more positive bias are:

- North American airlines

- US REITs and China homebuilding

- Irish and Philippine banks

- Spanish, Nordic and Hungarian banks

- Residential mortgages in the UK, Netherlands, Ireland, Spain and Portugal

- Peripheral Eurozone SME loans

- Prime commercial real estate in some continental countries.

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