October 2021 Industry Monitor

Download the October Industry Monitor infographic below.

Credit Benchmark have released the end-month industry update for end-September, based on the final and complete set of the contributed credit risk estimates from 40+ global financial institutions.

The latest update to consensus credit data paints another largely positive picture.

Corporate credit risk continues to trend in the right direction with more improvements than deteriorations as seen by a ratio of 1.6:1. Consumer Goods is out in front at 1.9:1, and the Health Care, Technology, and General Retailers sectors are right behind at 1.8:1. Travel & Leisure almost came in at neutral, a notable improvement from earlier months – though the balance tipped slightly into negative territory once more. Beyond that, Telecommunications at 1:1.3 saw more deterioration than improvement, following last month’s weak ratio. The Utilities sector, which was weak last month along with Telecommunications, is improving once more, at 1.6:1. Industrials and Basic Materials are each at 1.5:1.

On a country-level, Canadian Corporates led the pack with an improvements to deteriorations ratio of 2.5:1, above the 2.2:1 seen for US Corporates and the 1.3:1 seen for UK Corporates.

Financials also saw more improvement than deterioration with a ratio of 1.4:1.

According to David Carruthers, Head of Research at Credit Benchmark:

“The latest consensus data confirms the broad-based credit recovery that has been underway for some months. A number of Corporate and Financial sectors show more improvement than deterioration. There are certainly plenty of challenges ahead, with monetary tightening and supply chains issues especially in energy markets. But after the ravages of covid, there is still scope for some further credit improvements in a number of areas.

There are already signs the supply chain problems that have been building for months are threatening the global economy as inflation picks up, and some (but not all) think it could get worse. In fact, one of the world’s biggest port operators, DP World, think the disruption could last for two years. Surging energy prices aren’t helping.

Other research by Credit Benchmark has compared improvements versus deteriorations amid rising interest rates. After a period of improvement, the direction is downward, leaving the net credit improvements in balance. There may be a risk that the net credit balance turns negative in the months ahead with more central banks imposing monetary tightening.

In the update, you will find:

  • Credit Consensus Distribution Changes: The net increase or decrease of entities in the given rating category since the last update.
  • Credit Transition: Assesses the month-over-month observation-level net downgrades or upgrades, shown as a percentage of the total number of entities within each category.
  • Ratio: Ratio of Improvements and Deteriorations in each category since last update, calculated as Improvements : Deteriorations.
  • IG to HY Migration: The number of companies which have migrated from investment-grade to high-yield since the last update (known as Fallen Angels).

Credit Benchmark will continue to provide regular reports on these migration rates. If you have any questions about the contents of this update, please get in touch.

For full details, please download the October Industry Monitor infographic here:

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    Credit Benchmark brings together internal credit risk views from over 40 leading global financial institutions. The contributions are anonymized, aggregated, and published in the form of consensus ratings and aggregate analytics to provide an independent, real-world perspective of credit risk. Risk and investment professionals at banks, insurance companies, asset managers and other financial firms use the data for insights into the unrated, monitoring and alerting within their portfolios, benchmarking, assessing and analyzing trends, and fulfilling regulatory requirements and capital.