Credit Market Research

Positive rating actions outpaced negative ones for the seventh consecutive week, with 10 upgrades versus seven downgrades. Meanwhile, four U.S.-based issuers were downgraded to 'CCC+' and below, two being from the media and entertainment sector.

Upgrades included Cyprus, for which we raised our long-term rating to 'A' on continued external and fiscal deleveraging.

We recorded two defaults last week, both on U.S.-based companies, bringing the yearto-date total to 77, compared with 85 at the same point last year. Chemical manufacturer Advancion Holdings LLC was downgraded to 'D' on completion of debt exchange, and business and consumer services provider Atlas CC Holding LLC was downgraded to 'D' following debt amendment.

Positive rating momentum continued to build in August as upgrades outpaced downgrades for a third consecutive month, the longest such streak of 2026. Investment-grade issuers accounted for 42% of all upgrades in August, the second-highest share this year, indicating that rating improvements extended across the rating spectrum.

Against this backdrop, net bias improved to -3.4%, its strongest reading since August 2022. The recovery remained broad-based, driven by rising positive bias, falling negative bias, and notable improvements in the sovereign, aerospace and defense, and financial institutions sectors.

Global defaults remained elevated in August but below both last year and historical averages. At the same time, the U.S. share of defaults reached its highest level since 2020, while missed-payment defaults gained ground relative to distressed exchanges, pointing to increasing liquidity pressures among some of the weakest issuers.

Structured finance rating pressure eased considerably in August as downgrades fell by more than two-thirds from July. However, weakness remained firmly concentrated in CMBS, which recorded no upgrades for a fifth consecutive month and maintained a 100% downgrade ratio.