Credit Market Research
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.
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Credit Trends
Global Financing Conditions: Issuance Growth Could Slow In 2026 As Strains Persist
Global economic growth and bond issuance remained resilient in 2025 through bouts of heightened market risk, and we expect this to continue in 2026, though issuance growth could slow to 4.8%.
A healthy refinancing pipeline and accelerating M&A activity should support corporate (including financial services) issuance growth.
A multiyear AI and data center investment phase has started, which will likely continue to boost issuance by the high-tech sector, though the precise timing and extent of future debt issuance are far from certain.
As we enter the latter phase of this credit cycle, we maintain the possibility for issuance to decline in our downside scenario, where economic growth slows, geopolitical risks finally shake market confidence, or China's issuance growth slows amid efforts to reduce certain debt.
This Week In Credit
Chemicals Remain In Focus
Downgrades continued to outpace upgrades last week. The number of downgrades remained stable at 11, all speculative‑grade issuers. Most downgrades came from the media & entertainment and chemicals sectors, with three each.
Upgrades increased to seven, up from four the week before. The number of issuers with positive outlooks/CreditWatch continued to exceed those with a negative outlook/CreditWatch, although numbers in both categories declined week-on-week.
PMHC II Inc. recorded the only default last week. We downgraded the U.S.-based global manufacturer of diversified specialty chemicals to ‘D’ from ‘CCC+’ because of its distressed debt restructuring.
This Month In Credit
Outlook Bias Improves Amid Lingering Risks
Net outlook bias (the percentage of issuers with a positive outlook or on CreditWatch positive minus the percentage with negative outlook) increased in January for the fourth month in a row to -5.2%. But only three sectors--insurance, financial institutions, and transportation--had a positive net bias.
January saw its first fallen angel of the year, and the number of potential fallen angels was over double the number of potential rising stars. Utilities was the only sector with a new potential fallen angel and had the largest concentration of potential fallen angels (nine).
Monthly corporate defaults remained steady with nine in January, eight of which were in the U.S, while Europe saw no monthly defaults for the first time since December 2024. We expect the U.S. speculative-grade default rate to reach 3.75% by December 2026, and the European speculative-grade default rate to reach 3.25%.
U.S. BSL CLO exposure to obligors rated 'CCC' continued to rise, increasing 34 basis points (bps) to 5.8% (as of Jan. 26, 2026). European exposure also rose, but by a lesser extent, to 4.7% as of Jan. 31, 2026.
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