Credit Estimate Snapshot: New Issue and Refreshed Credit Estimates in Q4 2024 Shatter Three-Year Record High

Credit Estimate Volume New issue and refreshed Credit Estimates (CEs) in Q4 2024 shattered a three-year record high, pushing 2024's total volume to 1,424, marking a 3.6% growth over 2023. This quarter, we issued and refreshed a total of 439 CEs across 422 borrowers for 29 lenders, including managers of collateralized loan obligations (CLOs) and private credit funds (Exhibit 1 below). Total volume includes CEs assigned to new borrowers and existing CEs refreshed for periodic review and amendments, as well as a small portion of internal assessments.

Key Highlights
-- New CE volume continued to increase in Q4 compared with last quarter, with slightly more B (low) issuance.
-- Out of the 257 existing borrowers with a previously active CE, there were 40 upgrades, 33 downgrades, and 184 confirmations. About 5.4% of existing borrowers in the B (low) category or better were downgraded to CCC categories in this quarter.
-- The Healthcare sector recorded the highest sales growth (13%) among all sectors, while the Technology sector exhibited the highest leverage (6.92x). The Consumer Cyclical sector has benefited the most by declining interest rate, resulting in improved Interest Coverage (1.74x).
-- New borrowers in Q4 continue to exhibit lower Net Leverage and higher Interest Coverage than existing borrowers.