Dividing the period of analysis in three periods i.e 1981-1991, 1992-1997, 1998-2011 we could easily interpret the actual trend in the bond ratings by Standard and Poors.
1981-1991: This was the period of slow economic growth and as a result, once could witness that till 1991, number of bonds downgraded had exceeded the number of bonds upgraded.
1992-1997: This was the time of blue chip stocks and when US economy was introduced to the boom of technology. As a result, with the rejuniveation of US economy, the number of bonds upgraded exceeded the number of bonds being downgraded.
1998-2011: Soon after the bursting of the technology bubble, the US Economy again saw a decline in their economic growth and this resulted in poor performance of most of the bond issues till 2003. However, post that period, with the beginning of housing bubble and relaxed monetary policies of the Fed, the upgrades again outraged the downgrades but this could not stay long as with the arrival of financial crisis during 2008-09, the number of downgrades again exceeded the number of downgrades.
Referring to the trend over rating of the bonds, over the years, the number of downgrades has exceeded the number of upgrade ratings. Important to note that during 1981, the number of upgrades were approx 130 while the downgrades were 180. However, during the years, the number of downgrades increased significantly, primarily during the period of financial crisis of 2008-09. By the end of 2009, the number of downgrades were 1080 approx while the upgrades were only 250 approx.
Thus, although there were years when the number of upgrades exceeded the number of downgrades but over the years, most of the bonds were commonly downgraded.
The ratio of Downgrade to Upgrade seems particularly high during 2008 and 2009. For Instance, during 2008, the ratio was approximately 2 indicating that the number of bonds downgraded were twice as the on upgraded. However, the very next year the ratio increased to approximately to 4.
Such significant rise in the ratio of downgrades to upgrades were burst of housing bubble and failure of banking system in the United States. This was the time when most of the issues were going junk with high amount of bankruptcy claims being filed by the companies.