Upgrades/downgrades in Fitch’s PMM portfolio are generally skewed toward downgrades, as issuer ratings can be constrained on the upside based on limited scale.
Downgrades greatly outweighed upgrades in 3Q23 as pressure from higher interest rates affected the FCF and financial flexibility of issuers in lower rating categories. This quarter saw 15 downgrades but only one upgrade. Of the downgrades, two represented defaults and five represented rating movement from the ‘B’ category to the ‘CCC’ category. Fitch expects the negative rating skew to continue as issuers wrestle with higher interest rates for longer in the face of a looming recession.
(Past performance is no guarantee of future results.)
Latest news
Q2'26 BDC analysis shows additional 184 bps of nonaccruals at cost
In a universe of 173 business development companies, or BDCs, Octus identified a total of $9.5 billion of debt (at cost) in nonaccrual status reported in the second quarter of 2026, a slight decline of 5% from $10 billion in the first quarter of 2026.
Reading the Board
The story changes depending on which numbers you’re counting.
Private Credit Defaults 101: Different Numbers, Different Stories
In Season 2 of Billions, Bobby Axelrod takes his lawyer Orrin Bach to an empty Yonkers racetrack in the dead of night.