Corporate credit ratings in Australia and New Zealand have improved over the past 12 months and the outlook for the December is stable, Moody’s reported.

Moody’s Investors Service released its September quarter report on credit trends for Asia Pacific corporates, which shows that at the end of the quarter 87 per cent of non-financial corporates in Australia and New Zealand had a stable outlook.

This compares with 86 per cent in the June quarter, 82 per cent in the March quarter, 80 per cent in the December quarter last year and 82 per cent in the September quarter last year.

The proportion of companies under review for downgrade has fallen from 14 per cent to 11 per cent over the same period.

There was just one negative rating action during the quarter (there were 16 in the March quarter 2020 and nine in the June quarter 2020).

Moody’s said the credit trend has been supported by stable domestic demand and elevated commodity prices. It expects that trend to continue for the rest of the year, despite the risks from tighter monetary policy, ongoing high inflation and lower global export demand.

Moody’s said: “We have maintained our 2022 Australia GDP forecast of 3.2 per cent and increased the inflation forecast to 7.8 per cent. 

“The unemployment rate was 3.5 per cent as of September 2022, lower than pre-pandemic levels and supportive for more household consumption.”

The utility sector was under most pressure during the quarter, with 25 per cent of sector ratings having negative implications, given strong competition in the industry and increased fuel cost, as well as increasing investment needed in clean energy.