U.S. nonfinancial corporate borrowers’ rating distribution and average credit rating have reached a near 15-year low–a sign that defaults could spike as the U.S. corporate credit cycle peaks. Our ‘BB’ average credit rating on U.S. corporate borrowers in 2015 has fallen below the average we recorded in the aftermath of the 2008-2009 credit crisis. After the financial crisis, quantitative easing-induced low interest rates enabled companies across the credit spectrum to borrow at attractive pricing and terms in the capital markets. And, until recently, investors were willing to accept the heightened risks associated with speculative-grade (rated ‘BB+’ and lower) debt in return for higher yields. However, the residual hangover from years of lenient credit may become painful for lower-quality issuers, especially when lenders become more selective and discerning. As borrowing costs rise with market volatility and uncertainty, lower-quality borrowers will most likely feel a credit pinch in a more subdued and conservative borrowing environment.