March 28 (Reuters) - Ratings upgrades of cities, states and other U.S. local governments by Standard & Poor’s outpaced ratings cuts in 2012, a turnaround from 2011’s mix and a sign America’s economy was steadying, the Wall Street credit group said on Thursday.
“We believe this reflects that the economic recovery, while remaining slow, gained traction in 2012,” S&P said in a study. “As a result, governmental tax revenues stabilized and, in the aggregate, approached pre-recession levels.”
During 2011, S&P had issued more ratings cuts than raises.
U.S. public finance, which pays for schools, roads and other infrastructure, remains stable and sound, even though debt defaults occurred in each sector, according to S&P.
Eleven public creditors defaulted on debts during 2012, in comparison to an annual mean of 2.1 since 1986, S&P said. No borrowers in housing defaulted.
“Four of the defaulted issues in 2012 held investment-grade ratings prior to defaulting, while seven held speculative grade ratings prior,” S&P said. “Compared to previous years, the number of defaults ... remained low, reflecting, in our view, the generally resilient nature of the sector overall.”