Speculative-grade ratings have benefitted from improved credit-market conditions and expectations for economic growth. The number of upgrades rose in the first quarter of 2024 (compared with the fourth quarter of 2023), while downgrades reached their lowest level since the third quarter of 2022. However, high interest rates and inflation continue to pressure our lowest-rated issuer’s credit quality and our upgrade-to-downgrade ratio. The media, entertainment, and leisure sectors experienced the most speculative-grade downgrades in March, while the capital goods sector experienced the most upgrades. The speculative-grade corporate default rate remained above its long-term average in March. However, we anticipate the U.S. trailing-12-month speculative-grade corporate default rate to remain relatively flat from current levels at 4.75% (80 defaults) by December 2024. In March, the negative and positive bias among speculative-grade issuers remained unchanged from the prior month at 22%.