Potential downgrades from investment grade outnumber upgrade prospects.

The number of global corporate issuers on the verge of being downgraded to “junk” bond status is almost double the number on the cusp of an upgrade from junk to investment grade, Fitch Ratings says.

In a research note, the rating agency reported that there were 29 issuers at risk of downgrade to junk status, as of the end of March.

“Revenue and margin pressures from higher tariffs and a protracted trade war could increase downgrade risks and decrease the likelihood of upgrades for some borderline credits,” it said.

Almost a third of the companies at risk of falling to junk ratings (31%) are from North America, with 42% in the Asia-Pacific region, 17% in Latin America, and 10% in the Europe Middle East and Africa (EMEA) region, Fitch said.

Conversely, there were 16 companies poised for a possible upgrade to escape junk territory, it noted — half of these companies are North American, 44% were in the EMEA and 6% are from Asia Pacific.

The value of the debt on the edge of an upgrade was approximately US$85 billion, compared with US$220 billion that was at risk of falling to junk, Fitch noted.

In the first quarter, there were three issuers that dropped from investment grade to junk and two that shed junk status, it said