JPM High-Yield and Leveraged Loan Morning Intelligence

Research evidence excerpt

JPM High-Yield and Leveraged Loan Morning Intelligence

) is $213.2bn or 7.3% of leveraged credit. Technology ($75bn, 35%) and Cable/Satellite

($24bn, 11%) account for the largest portion of this cohort. Note 19% of the Technology sector (B&L) is

trading at distressed levels. Meanwhile, the rating agency narrative for loans is improving at the margin

with the LTM par and issuer upgrade-to-downgrade ratios rising to a high since 4Q22. Notably, the # loan

issuers upgraded in June outpaced downgrades for only the third time in the last 4+ years. And June’s

upgrades impacting $41.1bn were the largest volume of monthly upgrades since April 2021. The YTD

upgrade-to-downgrade ratio for loans is 0.82:1 versus 0.52:1 in 2025. Note the B3 component of the LL

index has decreased 156bp off March’s historic high with B3s contributing the most upgrades (17) to

2026’s actions. Meanwhile, the # of HY issuers upgraded in June outnumbered downgrades for the third

time in four months. Year-to-date, the HY bond upgrade-to-downgrade ratio by issuer is 1.01:1 versus

1.03:1 in 2025. There were also four Rising Stars in June totaling $12.7bn and no fallen angels, bringing

the YTD totals to sixteen Rising Stars totaling $46.7bn and three fallen angels totaling $31.4bn. And LTM,

the BB, B, and CCC buckets have grown/contracted by +388bp, +18bp and -358bp, respectively.

--Overnight Price Action: S&P Futures are down a modest 5bp overnight amid weakness in

semiconductor stocks (SOXX: -1%). Meanwhile, Brent is stable and 10yr Treasury yields decline 2bp

ahead of a quiet day. Next week brings a slate of important economic data encompassing CPI, PPI and

Retail Sales amongst others accompanied by the start of earnings seasons led by banks and followed

by two major chipmakers.