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What We're Watching

S&P Global Ratings believes 2023 will begin as a journey through intensifying credit pressures, leading to (if all goes well) more stable financing conditions by year-end.


New risks are constantly emerging, and well-known risks will evolve.

Against this backdrop, we will be closely watching how market participants confront credit headwinds, deal with reshuffling capital flows, navigate geopolitical uncertainty, seek energy and climate resilience, and manage crypto and cyber disruption.

The capacity of these trends to instantly disrupt our interconnected world—and the credit markets that underpin it—is evident.


Confronting Credit Headwinds

Slower economic growth and rapidly rising interest rates are defining the role of debt across markets. On top of the rising cost of capital in primary markets, corporate borrowers are facing the headwinds of sticky inflation, a potential global economic downturn, eroding customer demand, and still-shaky supply chains. We expect this combination to lead to credit deterioration as fundamentals for many corporates and some sovereigns deteriorate further, although unevenly, across industries, rating levels, and geographies.


Reshuffling Capital Flows

With the era of easy money over, investors are rebalancing their portfolios to adjust for shifting risks and returns. Borrowers (especially those at the lower end of the ratings ladder facing tighter access to credit) will need to adapt to the reshuffling of capital flows from long-duration speculative assets to safer havens--as well as adapt to the knock-on implications for overall market liquidity, foreign exchange reserves, and investment in emerging markets.


Seeking Energy and Climate Resilience

The conundrum of balancing decarbonization with energy supply security and affordability is one not easily managed. The energy crisis in Europe, global supply-chain bottlenecks, and emerging markets' growth are limiting reductions in greenhouse gas emissions, despite countries' implementation of decarbonization policies. Europe's ability to meet its energy needs while continuing to lead the world toward net-zero--with either regulation or technology as the key driver--may set the tone for the year.


Managing Crypto and Cyber Disruption

The transformation of global and regional financial systems amid the adoption of new technologies--from artificial intelligence to cryptocurrencies, tokenization, distributed ledgers, and beyond--is accelerating an era of growth and discovery. It is also heightening single-entity and systemic cyber risk. Entities with weaker cyber governance and risk management will be more exposed to rating implications this year.