Credit Estimate Snapshot: Q3 2024 Demand for New Credit Estimates Hits Record High

In Q3 2024, we issued and refreshed a total of 381 Credit Estimates (CEs) across 362 borrowers for 27 lenders, including managers of collateralized loan obligations (CLOs) and private credit funds. Here are some of our key observations from Q3 2024:

-- New credit estimate volume doubled in Q3 compared with last quarter, with slightly more CCC issuance.
-- Out of the 223 existing borrowers with a previously active CE, there were 34 upgrades, 41 downgrades, and 148 confirmations. About 5.7% of existing borrowers in the B (low) or better category were downgraded to CCC categories in this quarter.
-- Interest coverage improved across many sectors, especially in Financial Services and Technology. The rate of annual revenue growth has declined, but remained positive.
-- EBITDA increased across most sectors.

"Forward looking into the Q4 credit estimate pipeline, demand for new credit estimates appears to be as strong as Q3 supported by increasing capital availability in the private credit sector and sustained borrower demand for new debt," said Siyun Chen, Vice President of U.S. Structured Credit Ratings at Morningstar DBRS."