Credit Estimate Snapshot: Q2 2025 Improved Company Financials Prior to Tariffs but Headwinds Remain

Quarterly highlights:
-- Out of the 195 existing middle market borrowers we have reviewed this quarter with a previously active CE, there were 21 deteriorations, 40 improvements, and 134 confirmations. Improvements were primarily driven by better financial data with a higher concentration in the Healthcare and Technology sectors.
-- While financial metrics across our book of outstanding CEs generally improved in Q2, they do not reflect the potential negative impact from macroeconomic pressure and heightened trade tensions, which drive our negative collateral performance outlook for middle-market borrowers in the U.S. Structured Credit and Funds 2025 Midyear Outlook.
-- Significant uncertainty remains on where the tariffs will ultimately settle. Some of this risk is mitigated by recent expansionary fiscal policy and anticipated interest rate cuts toward the end of 2025.