Mr. Patrick Wood reports

DELPHX CAPITAL MARKETS AND BONDIT TO CO-MARKET AI DOWNGRADE PREDICTION WITH CREDIT RATING SECURITIES PROTECTION

Delphx Capital Markets Inc. has entered into a non-binding memorandum of understanding with BondIT USA Inc. to co-market the two firms' complementary products: BondIT's Scorable, an AI-driven (artificial intelligence) model that predicts corporate bond rating migrations, and Delphx's credit rating securities (CRS), the company's proprietary instruments that pay fixed cash when a referenced bond is downgraded. The shared proposition is simple: Scorable flags the migration, and CRS protects against it. Predict, then protect.

The arrangement comes as institutional demand to hedge and trade credit-rating risk across AI-exposed corporate debt has risen sharply, reflected in a wave of new credit products from major institutions over recent months.

CRS consists of a collateralized put obligation and a matched collateralized reference note, issued as Section 4(a)(2) private placements through the company's Quantem platform, with U.S. Bank as custodian and calculation agent. The holder receives a fixed cash payout, fully collateralized in U.S. treasuries, when an agency downgrades the referenced bond. Unlike credit default swaps, which pay on default, CRS pays on the rating migration itself, the event that drives the capital and mark-to-market impact for bondholders.

Scorable, developed by BondIT, applies machine learning to forecast rating migrations across the corporate bond universe, giving investors an early read on which names are most likely to be downgraded.

Under the MOU, the firms will jointly market to institutional holders of agency-rated bonds, including insurers, asset managers, pensions, banks and credit funds. The announcement follows Delphx's broadening of CRS beyond its original insurer base to the full institutional market, both for investors seeking to hedge downgrade risk and for those seeking to take a view on it. The company is in active discussions with institutional investors evaluating CRS and is exploring structures to broaden access further, including a potential fund or exchange-traded product.

"The market has woken up to credit-rating risk, and CRS is built to pay directly on the downgrade, the event that actually drives the loss," said Patrick Wood, president and chief executive officer of Delphx. "Pairing it with BondIT's prediction engine gives investors the full path, from spotting the migration to protecting against it. We believe the timing is strong and the opportunity ahead is significant."

"We're very excited to partner our AI-based credit risk assessment solution with such an innovative product and think that utilizing both CRS and Scorable provides an ideal solution for ratings migration. Scorable has been proven to significantly outperform in forward looking ratings migration and CRS is a perfect synergy from a markets instrument perspective," said Andrew Merrill, head of relationship management at BondIT.

About Delphx Capital Markets Inc.

Delphx Capital Markets is a structured finance company that develops proprietary securities addressing unmet needs in the credit markets. Its credit rating securities provide financed, collateralized protection against bond rating migration, issued through the company's Quantem platform. Delphx is headquartered in Miami and Toronto.

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