Subfolder permissions not working unless same permissions applied to parent folder

We have a top level folder called ‘Tools’ in which all users have build permissions and our admin team has created a few helper jobs everyone can use. Within that we have an ‘AWS’ subfolder in which a specific AD group is allowed to create AWS specific helper jobs for everyone to use.

On the AWS subfolder I’ve given this appropriate AD group full permissions (every box checked in the matrix) yet a member of that group is not able to create credentials. Once I gave that AD group Credentials → Create on the parent Tools folder he was able to create credentials in the AWS folder.

I would have expected he would be able to create credentials in the AWS subfolder without having to give him the Credentials → Create on the parent folder. Am I mis-understanding how this permissions hierarchy works or is this a bug or misconfiguration?