Monday Dec 29, 2025
Monday Dec 29, 2025
Monday, 29 December 2025 00:35 - - {{hitsCtrl.values.hits}}
Sustained resilience in global credit conditions is expected to extend into 2026, supported by steady economic growth, easing interest rates, and strong investor appetite, according to S&P Global.
In its latest outlook, S&P Global said active refinancing activity in 2025 has pushed out debt maturities for many issuers, while borrowing costs have declined or continue to ease, helping maintain favourable funding conditions. Ongoing investment in technology, particularly linked to artificial intelligence, has also provided support to growth and credit markets.
However, the ratings agency cautioned that the outlook is uneven across sectors and regions. It noted that geopolitical realignments could still trigger unexpected policy shifts, while heavy capital spending driven by assumptions around AI’s transformative potential may eventually lead to overinvestment, particularly in data centre construction, weighing on future credit conditions.
S&P Global forecasts stable global economic growth of 3.2% in 2026. This reflects moderating expansion in the United States and China, continued recovery in the Eurozone, and sustained resilience in emerging markets. Lower inflation and robust labour markets are expected to underpin consumer spending across most developed economies.
Corporate default rates are likely to remain contained, although still above long-term averages. The U.S. trailing 12-month speculative-grade corporate default rate is projected to ease to 4% by September 2026, slightly below current levels, while the European rate is expected to decline to 3.25% from 3.7%. The agency cited healthy corporate earnings, manageable tariff effects so far, and a gradual decline in policy interest rates as key supporting factors.
After two years of supportive market conditions, credit quality has broadly improved, with net rating upgrades recorded across corporates, financial institutions, and sovereign issuers. Nevertheless, eight sectors have seen net downgrades in 2025, largely reflecting weaker starting credit profiles or exposure to tariff-related pressures. These include capital goods, chemicals, consumer products, retail and restaurants, and the automotive sector.
S&P Global noted that rating actions driven primarily by tariffs have affected less than 1% of its rated universe globally, though the full impact of tariffs has yet to play out. In contrast, high technology and metals, mining and steel recorded net upgrades, while sectors such as chemicals, packaging, and environmental services remain in prolonged downturns.
Overall, the agency said its net outlook bias remains broadly unchanged over the past year, suggesting rating actions are likely to stay balanced, even as divergence persists at the sector level.
