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.

Rating momentum notably improved in June with upgrades more than doubling and a sharp increase in the share of investment-grade upgrades, signaling strengthening fundamentals among higher-quality issuers. There were also five rising stars in June-- the highest monthly total since December 2025.

Global corporate defaults retreated sharply in June, reversing May’s temporary spike and reinforcing our view that default activity remains contained. Despite this, we still forecast a modest increase in defaults as geopolitical and macroeconomic uncertainties persist.

The weakest links total increased in June by nearly 5%, its highest level since December 2025. Nearly 70% of new additions were concentrated in four sectors, highlighting ongoing rating pressure among lower-rated issuers.

Structured finance: Credit performance remained broadly positive in June, though U.S. collateralized loan obligation (CLO) downgrades increased. Those downgrades largely reflected mounting pressure in lower-rated tranches, as failing cash flows and elevated exposure to 'CCC' and defaulted assets weakened credit support.