Credit Market Research

Downgrades doubled to 14 last week, the highest weekly count since the end of April, while upgrades declined to three from 10.

There were rating actions in multiple sectors, the consumer products sector recorded the most downgrades at three. U.S.-based issuers accounted for nine downgrades and all three upgrades.

New risky credits increased to three last week, from one a week earlier: We downgraded Sweden-based Polygon Group AB on elevated leverage and liquidity risk; we also downgraded U.S.-based Mega Broadband Investments Intermediate I LLC on restructuring and Planview Parent Inc. on refinancing risk. 

There was one default last week, a consumer products issuer, the same as the previous week. This brought the year-to-date total to 87, less than the 97 last year.

Upgrades exceeded downgrades for a fourth consecutive month in September, and net bias reached its highest level in more than four years. However, the positive ratings momentum remained concentrated in a few sectors, led by financial institutions.

Distressed exchanges continued to dominate default activity, but repeat defaulters accounted for 31% of year-to-date defaults through Sept. 30, signaling rising liquidity pressure.

Weakest links fell to their lowest in four years as improving outlooks helped removals outpace additions. However, additions from high technology reflected rising refinancing and capital-structure risks.

Structured finance downgrades fell for a second consecutive month and upgrades outpaced downgrades across all major asset classes except CMBS, which has gone six months without upgrades.