US corporate bond downgrades are surging at an alarming pace:
$55 billion of corporate bonds were downgraded from investment-grade to junk status in 2025, the highest since 2020.
At the same time, only $10 billion of upgrades to investment-grade were recorded, the lowest in at least 6 years.
This means downgrade volumes were 5.5 times higher than upgrades, compared to 4.8 times in 2020.
By comparison, in 2024, there were only $4 billion in downgrades and $22 billion in upgrades, meaning upgrades outpaced downgrades by 5.5 times.
Meanwhile, $63 billion of bonds are now on the brink of junk status, up from $37 billion at the end of 2024.
The credit quality of US corporate bonds is deteriorating.
