Situation Room: 1Q26 IG fundamentals final update: more earnings, less cash

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Situation Room: 1Q26 IG fundamentals final update: more earnings, less cash

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Situation Room

1Q26 IG fundamentals final update: more

earnings, less cash

Credit Analysis

1Q26 IG fundamentals final update: more earnings, less 20 May 2026 Corrected

cash Credit Strategy

United States

By now, we have 1Q fundamentals for 88% of US IG issuers in our sample (public US IG Cross Product

issuers ex. Financials and Utilities). This almost-final estimate shows IG credit

fundamentals were strong in 1Q, although cash levels declined. As a result, net leverage Yuri Seliger

increased to the highest level since 2Q-24, while gross leverage was unchanged. CreditBofAS Strategist

Earnings growth and margins reached the highest level since 2022. Cash levels declined +1 646 855 7209

yuri.seliger@bofa.com

notably in 1Q, debt grew modestly, and capex spending re-accelerated for a median US

Sohyun Marie Lee

IG issuer. Credit Strategist

BofAS

IG leverage: stable gross, higher net +1sohyun.lee@bofa.com646 855 7217

We estimate median gross leverage was unchanged at 2.57x in 1Q (Exhibit 1), while net

leverage increased to 2.06x in 1Q vs 1.97x in 4Q.

In this report

Further details on IG credit fundamentals

Daily supply snapshotGross and net debt continued to grow, increasing +1.6% YoY and +3.2% YoY in 1Q,

respectively (Exhibit 9, Exhibit 10). The median YoY EBITDA growth accelerated to Daily dealer inventories update

+8.1% in 1Q from +7.0% in 4Q, the highest since 2021 (Exhibit 12). The coverage ratio

modestly declined to 10.0x (Exhibit 15), while borrowing costs were stable (Exhibit 16). Daily HG fund flows

Net leverage increased across ratings but especially for BBBs, to the highest level since Daily foreign demand tracker

4Q-20 (Exhibit 2, Exhibit 3).