KBRA releases its Middle Market (MM) Monthly Pulse, a recurring dashboard that will serve as an update between the quarterly Middle Market Borrower Surveillance Compendium. The MM Monthly Pulse will provide a more transparent and frequent view of the direct lending market’s credit stress, borrower fundamentals, and emerging risks through the lens of KBRA’s assessment portfolio. This issue covers 2,948 unique global MM-sponsored borrowers assessed on a last 12-month (LTM) basis through August 2026 and 1,053 assessments completed during the rolling three-month (3M) period from June through August 2026.

August indicators showed continued pressure at the margins. The rolling LTM KBRA Middle Market Default Monitor (KMDM)—our forward-looking gauge of borrowers in payment default, for whom default is imminent, or those where significant sponsor or lender intervention prevented a payment default—rate by count increased to 3.5% from 3.4% in the prior monthly observation, while the rolling 3M surveillance downgrade rate increased to 13.9% from 12.2%.

In the latest rolling 3M observation, median revenue compound annual growth rates (CAGR) were broadly flat at 11.5% compared to the prior quarter, while median EBITDA CAGR slowed to 18.8%, and median gross leverage increased to 6.5x. Taken together, weaker recent fundamental performance and rising leverage continue to leave vulnerable borrowers exposed to operating underperformance, although changes in the assessment population between periods may influence 3M comparisons.

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KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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