This report does not constitute a rating action. Credit quality is stable at the cohort-level, but a dive into thematic factors reveals a widening divergence. We expect the North American corporate'B-'cohort will remain largely steady in 2027. Our generally stable outlook for the cohort reflects our expectation for adjusted EBITDA growth of about 7% in 2027 which should help offset a 50 basis point (bps) rise in the fed funds rate. Within the cohort, there is a wide-ranging spread in credit resilience, driven by the interaction of prevailing macroeconomic forces with three key issuer-specific factors: capital intensity, operating leverage, and demand resilience. Our analysis looks at the robustness of earnings headroom for North American corporate entities currently rated
