Credit Market Research

There were six downgrades compared with four upgrades last week, with the overall number of rating actions declining and the balance tilting negative. Downgrades were primarily to U.S.-based issuers and included one new risky credit (issuers in the ‘CCC’ rating category); BCP V Everise Acquisition LLC.

Of the four upgrades, two were U.S.-based new rising stars; MercadoLibre Inc. and DT Midstream Inc., bringing the year-to-date total to 15.

There was just one default last week, Thrasio Holdings Inc., due to a distressed exchange. 

Downgrades increased 86% in May and outnumbered upgrades for the first time in five months, driven by speculative-grade rating activity.

The number of weakest links increased last month, driven by 28 additions, and despite a high number of removals (26).

Monthly defaults more than doubled in May to 19 from eight in April, 10 of which were first-time defaulters. We expect the global speculative-grade default rate to reach 3.75% by March 2026.

Forward-looking ratings performance indicators also signal a down shift in performance, with net bias (positive minus negative bias) recording its largest decline since September 2022.