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.
Our "Risky Credits" series focuses on corporate issuers rated 'CCC+' and lower. Because many defaults are of companies in those categories, ratings with negative outlooks or on CreditWatch negative are even more important to monitor.
NORTH AMERICA
Downgrades outnumbered upgrades for the second week in a row, with all downgrades occurring across speculative-grade issuers. Of the seven downgrades, three were into the 'CCC' category, as year to date new risky credits (31) remain elevated compared to the same time last year (26).
Upgrades predominantly occurred across speculative-grade issuers and included one new rising star; Finland-based food and consumer products packaging provider, Huhtamaki Oyj.
The weekly default count increased to five, up from four last week, with four U.S.-based issuers and one Germany-based issuer, three of the defaults were due to distressed exchanges.
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Net bias (positive minus negative bias) stalled at 4.9% as of March 31 after 10 months of continued increases.
The shift in momentum is largely due to a rise in new potential downgrades, up by 70%, to the highest level of additions in the past 12 months.
In contrast, weakest links (issuers rated 'B-' and below on either negative outlooks or CreditWatch negative) continued to decline, reaching 218--the lowest level since September 2022.
While defaults increased to nine in March, the year-to-date count (26) tracks below first-quarter 2024 (37). We are maintaining our base-case projections for 2025, however, the longer tariff uncertainty lasts, or if it worsens, the greater the likelihood defaults move toward our pessimistic cases.
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