This Week In Credit

Upgrades Spike

Upgrades jumped last week, led by nine Italian financial institutions and one transportation issuer, following a similar action on the sovereign on April 11. Last week's other upgrades spanned five sectors, including two sovereigns.

Downgrades mainly affected speculative-grade issuers and included one new fallen angel--the fifth this year--Huntsman Corp., a differentiated chemical products producer.

There was one default last week--Ascend Performance Materials Operations LLC, a U.S.-based chemicals, packaging, and environmental services issuer, filed for Chapter 11 bankruptcy protection.

This Month In Credit

Stalling Momentum?

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.