Business cycle in recovery mode: Nomura

A rising number of upgrades compared with downgrades so far in 2015 could mean a gradual improvement in the business cycle, financial services firm Nomura has said In a report dated September 24.

Nomura’s Sonal Varma and Neha Saraf have shown that the up/down ratio, or the ratio of credit upgrades to downgrades, rose to 2.3 in April-August FY16 compared to 2.0 in FY15, 0.9 in FY14 and 0.4 in FY13.

A ratio of over 1 indicates more upgrades than downgrades and could therefore suggest an improving outlook. Nomura cites Crisil to say that much of the improvement in the ratio was led by medium sized firms with less leverage, while big infrastructure firms continue to languish under debt.