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November 05, 2026
Partner, Chief Economist
When rates are higher for longer, stress in credit markets starts migrating from the bottom, beginning with the lowest-rated credit.
The ongoing widening between CCC and single-B shows that the weakest borrowers have run out of runway, and three things would need to happen for stress to migrate to single-B:
The bottom line is that a single-B issuer typically has thin but positive free cash flow after interest. A CCC issuer often does not, so every quarter of elevated rates means more cash burn, a bigger PIK component and a growing reliance on refinancing windows or liability management exercises.
Sources: ICE BofAML, Macrobond, Apollo Chief Economist
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