Rating Trend for Middle Market Issuers

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Following a modestly positive 2021 in which upgrades in Fitch’s Private Monitored Rating portfolio outpaced downgrades at a rate of around 1.2x, downgrades outpaced upgrades in 2022 at a 1.8x rate as inflation crimped earnings. Downgrades continued to outpace upgrades in 1Q23, with around two downgrades for every upgrade as rising interest rates weighed on cash flow, pressuring liquidity.