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 these categories, ratings with negative outlooks or on CreditWatch negative are even more important to monitor.
NORTH AMERICA
Downgrades outnumbered upgrades for the first time since May, albeit in a light week for rating activity.
There were two defaults last week--Netherlands-based electricity producer DTEK Renewables B.V. and U.S.-based skincare company Rodan & Fields LLC.
We added two risky credits (issuers downgraded into the 'CCC' category) to our list last week--Allen Media, LLC and CMG Media Corporation, both U.S. issuers from the media and entertainment sector.
CDS spreads widened across the board, but remain well below five-year averages.
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Headline inflation slowed in the U.S. as May’s consumer price index (CPI) reading came in below expectations, just as upgrades outnumbered downgrades for a fourth consecutive month--reflecting issuers’ improving credit quality.
But not all is well in credit, as signs point to heightened geopolitical risk. There were four sovereign downgrades in the month, including three in Eastern Europe affected by the extended conflict in Ukraine.
Weakness persists at the low end of credit: downgrades into the ‘CCC’/’C’ category continued to rise even as upgrades out of the category continued to decline.
Despite fewer defaults in May, the global default tally remains elevated, and Europe’s year-to-date tally remains at its highest since 2008.
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