Credit Market Research

Positive rating actions outpaced negative ones last week. The media and entertainment and high technology sectors led upgrades with two each.

There were two new rising stars: U.S.-based equipment rental firm United Rentals Inc. and tech provider Sandisk Corp. This brought the year-to-date total to 24, compared with 21 in the same period last year.

The consumer products and healthcare sectors led downgrades, with two each. U.S.- based Cogent Communications Group LLC was the only new risky credit following a downgrade due to increasing refinancing risk.

Weekly defaults fell to one, from three the previous week, driven by the distressed debt restructuring of Canada-based Corus Entertainment Inc. The year-to-date total of 86 remains below last year’s level of 95.

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.