Private Credit Downgrade Actions Up Moderately Relative to Upgrades in Q1 2025

Private middle market credit rating actions indicate a moderate increase in the ratio of downgrades to upgrades for the trailing 12-month period ended February 21, 2025. Michael Dimler, Senior Vice President, Corporate Ratings, Private Credit notes that "downgrade activity remained heavily concentrated in the "vulnerable" rating categories (ratings of B (low) or lower), reflecting ongoing challenges among a subgroup of weaker issuers."

Other key highlights from the report:

-- The data continue to show proportionally fewer trend changes shifting to Negative with a general upward trend in the mix of Positive trends since Q3 2023.
-- Issuers rated D (default) increased to 2.6% of ratings from 2.2% at the end of Q4 2024, with two new defaults so far this year.