S&P Global Ratings says credit trends strengthen as repeat defaults stay high
Corporate credit conditions show firmer ratings momentum at the end of September 2026 even as funding conditions become more difficult. The improvement comes alongside a historically high share of repeat defaults, highlighting continued stress among weaker borrowers.
Highlights
- S&P Global Ratings reports improved ratings momentum and a reduced pool of weakest links in September, despite persistently high repeat defaults.
- U.S. 10-year Treasury yield hits its highest level since the early 2000s, with UK and Japanese benchmark yields also rising sharply.
- Higher benchmark yields increase refinancing pressures for weaker issuers, maintaining uneven credit conditions despite overall ratings improvement.
September credit indicators and rating trends
As reported by S&P Global Ratings, its latest monthly credit review says stronger ratings momentum and a smaller pool of weakest links contrast with a historically high share of repeat defaults in September.The report, based on data as of Sept. 30, 2026, says net bias improved as positive and negative outlook trends shifted across both investment-grade and speculative-grade issuers. S&P Global Ratings also notes that default data has been updated to reflect confidential issuers.
Within the report, weakest links are defined as issuers rated B- and below with a negative outlook or on CreditWatch Negative. S&P says the latest readings do not constitute a rating action.
Higher yields cloud the credit backdrop
Elevated benchmark yields are complicating the environment for corporate credit, according to the report. S&P says the U.S. 10-year Treasury yield has reached its highest level since the early 2000s, while comparable UK and Japanese benchmark yields have also climbed sharply.The combination of stronger headline rating trends and persistent repeat defaults suggests that credit conditions remain uneven across issuers. For companies facing refinancing needs, higher borrowing costs are likely to keep pressure on weaker balance sheets even as broader ratings momentum improves.
Our earlier article on rising U.S. Treasury yields examined how long-term rates above 5% are feeding through to higher mortgage costs, increased federal interest expenses, and tighter financing conditions across the economy. It also highlighted how a near $2 trillion deficit and political gridlock could keep fiscal pressures elevated, reinforcing a higher-for-longer rate backdrop that weighs on borrowers.
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