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
Rating actions were broadly neutral last week, though negative outlooks or CreditWatch placements comfortably exceeded the positive ones. Walgreens Boots Alliance Inc., a U.S. issuer from the retail sector, became the 10th fallen angel this year.
There were three defaults last week, all in consumer-focused sectors and two were in consumer products.
Credit pricing was mixed, though CDS indices once again widened across the board last week.
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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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