Fitch Ratings says in its latest bi-annual global credit outlook report that the intensification of the eurozone crisis in H211 triggered an overall rise in the proportion of negative rating outlooks assigned by the agency. While still broadly in line with recent historic lows, this rise tentatively reversed what had been a trend of two previous years of global rating outlook stabilisation.

"The proportion of ratings on negative outlook globally rose in the second half of 2011 to end the year at 9.3%, up from a post-Lehman low of 6.8% in Q211. However, this rise still remains substantially below the 18.3% seen at Q309," says Monica Insoll, managing director in Fitch's Credit Market Research group.

"The change in outlook to negative for the US sovereign last November has impacted a number of structured finance transactions and some sectors of US RMBS have continued to come under pressure. In addition, weakness in the eurozone and related sovereign rating activity has also lead to an increase in negative outlooks or watches for regional banks and SF transactions," added Insoll.

Banks experienced the greatest rise in negative outlooks, climbing to 11.5% from 8.5% at end-H111 as, given their rating linkages, they were impacted by eurozone negative rating action in December. Other segments which nudged up from cyclical lows of negative outlooks during the last six months include insurance, corporates and US public finance. The proportion of ratings at the highest level - 'AAA' and 'AA' categories - is reducing in those sectors most directly exposed to the eurozone debt woes. Since end-2010, this share fell to 24% from 32% for global sovereigns and to 33% from 61% in international public finance. Only 8% of bank ratings are now at this level, down from 13% a year ago, with insurance showing a similar result. Fitch expects this trend to continue.

In the absence of a "comprehensive solution", with politicians instead taking a gradualist approach to putting in place the institutional and policy framework for a more viable eurozone and ultimately greater fiscal union, Fitch expects the eurozone crisis to persist and be punctuated by further episodes of severe financial market volatility.

"Temporary or partial reprieve, such as the ECB liquidity lifeline in December, are expected to continue to play an important role in this "third way" scenario of muddling through. However, achieving growth, while simultaneously engaging in austerity programmes to wrestle government budgets under control is a serious challenge which will continue to impact the global credit outlook," Insoll concluded.

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