Our credit market research encompasses ratings performance indicators (including upgrades and downgrades, defaults, outlook changes, weakest links, rising stars, and fallen angels) alongside default and issuance forecasts and financing conditions coverage.
The amount of global corporate debt rated by S&P Global Ratings rose by 2.7% in the 12 months to July 1, 2023, due to an expansion of investment-grade debt.
During this period, the amount of speculative-grade debt outstanding declined by 3.1% as lower-rated issuers, facing higher-for-longer interest rates, appear more focused on refinancing or paying down existing debt. By region, Europe saw a sharper rise in its level of rated debt than the U.S., partially from the effect of the U.S. dollar depreciating versus the euro.
While more than 90% of investment-grade debt consists of fixed-rate bonds and notes, speculative-grade debt is more exposed to higher interest rates through its larger concentration of floating rate loans and revolvers.
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Five corporate defaults last week was the highest weekly count in six weeks, and followed the highest monthly tally for August since 2009. Meanwhile, weak September PMI data for some economies is raising concerns about slower growth, while recent comments by the ECB and the Fed hint at even-higher-for-longer rates. A light data week ahead will put more focus on Friday's releases of euro area inflation numbers and U.S. PCE inflation. In China, markets will be watching the official September PMI on Saturday.
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Rating actions turned more positive in July with upgrades outnumbering downgrades for the first time in three months, and in all rating categories ‘B’ and higher.
Despite higher interest rates, the homebuilders and real estate sector saw a mix of rating actions in July, including the month's largest downgrade, as well as two of the 10 largest upgrades and two rising stars.
A slowdown in China may be starting to have spillover effects. The chemicals, packaging, and environmental services sector added four new potential downgrades during the month, as a couple cited slowing demand from Chinese buyers as a factor.
The weakest links tally increased to 312 in July, with the U.S. health care sector leading the increase.
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