Credit rating downgrades are on the rise, signaling deteriorating company performance and sparking concerns about high corporate debt valuations. $94 billion of high-grade US debt was downgraded in Q2, exceeding upgrades. Economic uncertainties are increasing, making credit picking crucial. Interest payment delays and falling cash balances are additional worries.

Investors are optimistic about company credit staying strong, but the outlook is worsening with rising ratings downgrades and companies losing investment-grade status. In Q2, $34 billion of debt was downgraded to junk, compared to $3 billion upgraded. Trade tensions are escalating, adding to business uncertainty and vulnerability to tariffs.

Nissan Motor Co. raised $4.5 billion from a junk-bond sale, while NTT Inc. sold $17.7 billion in dollar and euro bonds, the largest-ever Asian corporate offering in global markets. Wall Street banks are discussing a $4.25 billion debt package for Sycamore Partners, and lenders are providing debt for various buyouts and refinancing deals.

Industry experts are cautious about credit quality, with Pacific Investment Management Co. focusing on sectors with strong cash flows and earnings growth. The high-yield loan market is heating up, prompting more selective deal-making. Overall, US corporate yields are still high relative to the last decade, but the environment is becoming more challenging.

Read more at Yahoo Finance: Worst Spate of Downgrades Since 2021 Signals Pain