This report does not constitute a rating action. Loan recoveries for middle-market corporations have increased from recent lows. The five-year trailing average recovery rate rose to 70% in 2026, up from a 66% low in 2023 and 2024. By contrast, large corporations'five-year trailing average continued to slide nearing 62%, the lowest level since 2003. Large corporations--defined in this study as companies with more than $350 million in total debt at the time of default--tend to have more complex capital structures, larger lender groups, and loan documentation with fewer covenants than middle-market companies. Conversely, stronger lender protections and smaller lender groups have supported higher recovery rates for middle-market loans. Despite some improvements, recoveries remain below their long-term averages for both
