Standard & Poor’s upgraded far more collateralized loan obligations than it downgraded in the second quarter of 2016, even as the credit quality of assets in these investment vehicles continued to deteriorate.

The rating agency said last week it upgraded 149 tranches of senior, mezzanine or subordinate notes across 49 CLOs. By comparison, it downgraded just 13 tranches of six CLOs. This was despite the fact that S&P downgraded more than three times the leveraged loans in CLO portfolios than it upgraded. The default rate on leveraged loans also climbed to a six-year high in June.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.