In this edition of Instant Insights, our key takeaways from recent articles include the following: our updated speculative-grade corporate default forecast for Europe and the U.S., Asia-Pacific economies likely to be hit by the U.S. Fair and Reciprocal Plan, ratings risks for North American automakers and suppliers posed by uncertain tariff policies, and a series of systemic risk publications on banks, nonbank financial institutions and private credits. We dive into fourth-quarter corporate earnings, African sovereigns, Vietnam's growth path, Asia-Pacific sustainable bond issuance, European auto suppliers, China AMCs, Japanese utilities, Canadian oil producers, Australian home insurance, public universities and retail landlords in Hong Kong, the decoupling of copper prices and GDP growth in Chile and Peru, and home prices, leveraged finance, and banks in the U.S. We also feature the 2024 annual default and rating transition study on global structured finance, asset-based finance funds, ABS and credit card securities in the U.S. and Canada, as well as stablecoin regulation, the not-for-profit sector, public finance rating activity, California public finance entities, student loan ABS, the structured finance chart book, and the servicer evaluation spotlight report in the U.S.

S&P Global Ratings periodically updates this article, which contains an edited compilation of key takeaways from our most up-to-date thought leadership organized by sector, region/country, and publication date (see table 1).

Table 1

Key Takeaways From Our Most Recent Reports

Credit conditions

1. Global Credit Outlook 2025: Promise And Peril, Dec. 4, 2024

• As economic soft landings materialize in many major economies and policy interest rates begin their descent, global credit conditions look set to remain supportive in 2025—with the caveats that there will be region- and country-specific divergence.
• Deepening geopolitical rifts pose the biggest risk to an improving credit landscape; Donald Trump's return to the White House will have wide-ranging ramifications—with a high level of uncertainty attached to his second term, which could reignite risk-aversion among investors and affect capital flows.
• Companies have made good progress in pushing out maturities, which has eased near-term liquidity pressure on many lower-rated borrowers, buying them time if market volatility arises and/or investors become more risk-averse.
• We forecast a decline in defaults, albeit at a slower pace than the rise. The lowest-rated borrowers continue to face the strains of still-elevated borrowing costs, the lingering effects of permanently higher prices on consumer purchasing power, and increasing protectionism that will weigh on global trade.
• Any improvement in global credit conditions will be along a narrow path strewn with overlapping risks. Slowing economic activity, the prospect of resurgent inflation, and political polarization could lead to sustained bouts of market volatility.

2. CreditWeek: What Are The Biggest Risks To Global Credit In 2025?, Dec. 5, 2024

• As we look toward 2025, S&P Global Ratings sees a year of promise and peril.
• The descent in key interest rates and resilience in many major economies may deliver on the promise of more favorable credit conditions.
• However, intensifying geopolitical and trade tensions increase the peril present in an already tumultuous environment.

3. CreditWeek: What Intersecting Risks Trends Are Key To Watch In 2025?, Jan. 16, 2025

• 2025 is likely to be a year of promise and peril. Easing inflation and resilient labor markets and consumer spending may deliver more favorable credit conditions. But the speed and extent of monetary policy remain in question--and trade and geopolitical tensions increase the peril present in an already tumultuous environment.
• Ultimately, global credit conditions are likely to remain supportive this year. But any improvement will be along a narrow path strewn with overlapping risks.
• Against this backdrop, we will be closely watching key emerging and established risks, including the direction of monetary easing and renewed focus on sovereign debt amid credit headwinds; how capital flows evolve as private credit responds to lower yields; the implications of geopolitical uncertainty on market volatility, global trade, and commodities; major economies' race to electric vehicle dominance; and the rise of data centers and AI.

4. Credit Conditions Asia-Pacific Q1 2025: Bracing For Volatility, Dec. 3, 2024

• Trade complications. Asia-Pacific's credit landscape is set for more volatility and slower growth in 2025, amid uncertain trade and foreign policies by the incoming U.S. administration. That said, more tariffs against Chinese exports are likely. Our base case factors in a rise in the effective U.S. tariff rate on Chinese imports to 25% from 14% from the second quarter of 2025, and retaliation by China in kind. China's GDP growth could slow to 4.1% in 2025 and to 3.8% in 2026, amid limited stimulus to bolster consumption.
• Growth at a crossroads. Countries with a large trade surplus with the U.S. (Vietnam, Thailand, Malaysia, and India) could be vulnerable to universal tariffs. To cope, Chinese producers may cut prices to stay competitive, while increasing exports to outside the U.S. The global trade slowdown could curb growth and squeeze Asia-Pacific currencies and exporters' revenues. We expect the region's growth to slip to 4.2% in 2025 and 4.1% in 2026, even as domestic consumption in emerging Asia remains supportive.
• Financing hurdles. Geopolitical tensions complicate the credit landscape. More volatility could reverberate across capital markets, energy prices, and supply chains. Should tariffs prompt a resurgence in U.S. inflation, the Fed's monetary easing may slow. In response, Asia-Pacific central banks could keep rates high to limit outflows. A strong U.S. dollar, narrower offshore funding access, and costlier interest may strain credit further.
• A supplementary slide deck is available here.

5. Credit Conditions Emerging Markets Q1 2025: The Tariff Trials, Dec. 3, 2024

• U.S. protectionism will test credit conditions in emerging markets (EMs). Our baseline assumptions include moderate new tariffs primarily on Chinese imports. Despite potential impacts on China's economy, we anticipate that EMs' credit conditions will remain resilient, bolstered by declining interest rates, and sustained--albeit slower--economic growth.
• The balance of risks has clearly worsened for EMs. Higher than expected tariffs on China and/or a generalized levy on U.S. imports could have ripple effects on global demand, inflation, interest rates, and currencies. These factors will likely slow EMs' economic growth, resuming inflationary pressures and worsening financing conditions, which will likely lead to a growing number of downgrades and defaults.
• In our baseline, EM rated issuers should benefit from ongoing monetary easing, supportive financing conditions and economic activity, despite the expected slowdown. This should reflect in stable rating activity.

6. Credit Conditions Europe Q1 2025: Fusion Or Fission?, Dec. 3, 2024

• 2025 marks another watershed moment for Europe and the EU. If the region does not rise collectively to the challenges from increasing geopolitical instability and fails to improve economic resilience, fragmentation could increase further.
• Regional wars and their potential effects on energy prices remain the key risk for Europe, at least over the short term. Other elevated risks that we monitor include protectionist trade policies, faltering growth, and tightening financing conditions.

7. Credit Conditions North America Q1 2025: Policy Shifts, Rising Tensions, Dec. 3, 2024

• The potential that higher tariffs will reignite inflation and slow—or reverse—the descent in policy interest rates are key concerns for credit conditions in the region.
• Amid the strained relationship between the U.S. and China, and the escalation in the Russia-Ukraine war, intensifying geopolitical tensions could weigh on market sentiment, investment, and capital flows.
• Still, the U.S. economy remains resilient, and defaults look set to slow.
• A supplementary slide deck is available here.

Autos

8. Credit FAQ: Impact Of U.S. Tariffs On China's Auto Sector: Watch For Second-Order Effects, Feb. 11, 2025

• China's fast-growing exports of autos and auto parts face one significant obstacle--tariffs.
• S&P Global Ratings believes increased duties will only have moderate direct effects on rated Chinese car firms. The secondary effects are more unpredictable and may be more impactful for entities.

9. Credit FAQ: European Auto Suppliers Face Old And New Hazards, Feb. 24, 2025

• Automotive suppliers in Europe, the Middle East, and Africa (EMEA) are likely to face the same headwinds this year as they did in 2024, namely, subdued automotive production, slow and volatile adoption of battery electric vehicles (BEVs), and the rise of Chinese original equipment manufacturers (COEMs).
• At the same time, new hazards, such as trade tariffs, could reduce operating visibility and further reduce profitability and rating headroom. With about 50% of rated European auto suppliers on a negative outlook, S&P Global Ratings sees an increasing risk of downgrades in 2025.
• Most European auto suppliers have limited financial flexibility for large debt-financed acquisitions and may have to rely on disposals to restore rating headroom.
• We believe that diversified auto suppliers with the least exposure to the powertrain transition, stronger balance sheets, and better positions with COEMs will fare best in 2025.

10. Uncertain Tariff Policies Could Create Ratings Risks For North American Automakers And Suppliers, Feb. 19, 2025

• The potential for a prolonged 25% tariff on imports from Mexico and Canada along with announced tariffs on steel and aluminum could have a multi-billion-dollar impact on Ford's and GM's profitability metrics.
• We expect most tier 1 suppliers would pass a substantial burden of the higher costs on to automakers, which would eventually have to pass it on to consumers through higher prices.
• Higher risk for credit metrics for suppliers stems from longer-term secondary effects. These include lower volumes due to higher prices, higher working capital, renewed supply chain shortages, increased production volatility, and the potential for elevated capital spending to relocate production longer term. These risks would be material if the tariffs become effective beyond three to six months or worse, extend through 2026.
• Aftermarket suppliers have greater pricing power and less production in Mexico, but tariffs on China could hurt some aftermarket suppliers.
• Dealers would experience fewer impacts overall and have greater cushion on their credit metrics.

Corporates

11. Credit FAQ: What The Creation Of JVs And Partial Disposal Of Subsidiaries Could Mean For A Group's Credit Quality, Feb. 17, 2025

• JVs can help companies finance significant and rising investments in new sectors and technologies, while the opportunistic disposal of fully or partly owned operations can help fund shareholder renumeration or facilitate deleveraging.
• The trend of creating joint ventures (JVs) or divesting stakes in subsidiaries among large, rated companies has gained momentum since the pandemic ended.
• S&P Global Ratings believes such activity will likely accelerate over the next few years.

12. Corporate Results Roundup Q4 2024: Results point to accelerating growth, Feb. 19, 2025

• Accelerating growth for sales and profits is the standout feature of the Q4 results season. Measured at an annual rate, global revenues for companies rated by S&P Global Ratings that report quarterly are up 2.3% based on current results, and 2.9% if commodity-linked sectors are excluded. The equivalent figures for EBITDA are 5.9% and 6.0%, respectively, implying expanding profit margins.
• Many results are still to come globally, with current results are weighted towards the U.S. For companies that report quarterly, 38% of results are in, 46% for investment-grade (IG), and 27% of speculative-grade (SG). About half of North American companies have reported versus 28% in Europe and Asia-Pacific.
• As in Q3, technology and semiconductor firms are having the biggest positive impact on growth (e.g. Amazon, Alphabet, Microsoft, SK Hynix, Taiwan Semiconductor), and oil and gas companies the most negative (e.g. Shell, BP, Total). Annual EBITDA sector growth rates are strongest for media, technology, and retail, and weakest for metals and mining, oil and gas, and aerospace and defense.
• Favorable margin trends are most apparent in the media, technology, and telecom sectors. Negative pressure is strongest in metals and mining, oil and gas, and aerospace and defense.
• Earnings calls are being followed closely for guidance as to the likely impact of U.S. tariffs –we have gathered samples from the largest rated autos and capital goods companies. For the most part, the impact of tariffs is not yet featured in companies' earnings guidance. Uncertainty around the scale and duration of tariffs is making their impact hard to assess, but companies expect mitigation through supply chains, localizing production, and raising prices.
• Interest-rate pressure appears to be easing rapidly. Cash interest payments are up 9.1% on an annual basis, down from 12.8% in Q3 and 23.8% this time last year. In North America, this annual rate is currently 5.2% down from 11.6%.

13. Industry Credit Outlook 2025: Compilation and Key Themes, Feb. 4, 2025

• The corporate outlook appears fundamentally healthy with broad-based growth, margins expanding, leverage falling, and interest coverage recovering.
• Anxiety around the potential for trade and tariff conflict is widespread, given the potential risks for demand, inflation, financial market volatility, and supply chains.
• AI, climate risks, and energy transition are the broader themes with most tangible credit risk and opportunity, given uncertain outcomes and substantial financial requirements.

Credit trends and market liquidity

14. Default, Transition, and Recovery: The European Speculative-Grade Default Rate Could Level Out At 3.75% By December 2025, Feb. 21, 2025

• We expect the European trailing-12-month speculative-grade corporate default rate to reach 3.75% by December 2025--down from 4.5% through December 2024.
• The default rate started to decline in the fourth quarter but remains historically elevated, largely as a result of increased use of distressed exchanges and debt restructurings.
• High-level market trends remain supportive, but 'CCC'/'C' issuers are still facing limited primary market access and sizable pending maturities.
• Growth risks from potential tariff moves by the U.S. have increased, but for now remain unclear and more of a downside risk rather than a baseline risk.

15. Default, Transition, and Recovery: 2024 Annual Global Structured Finance Default And Rating Transition Study, Feb. 22, 2025

• The global structured finance default rate more than doubled to 2.7% in 2024 from 1.3% in 2023 as stresses in the U.S. RMBS and European CMBS sectors took their toll.
• The rise in global structured finance defaults in 2024 was primarily driven by legacy U.S. RMBS transactions (pre-2009), primarily from the 'CC' rating category and within the subprime and alt-A subsectors. These two represented 85% of the year's total defaults.
• Of the 34,243 global structured finance ratings outstanding at the start of 2024, we lowered 4.8% (up from 3.3% in 2023) and raised 7.6% (down from 12.4% in 2023).
• The CMBS sector led downgrades in the U.S. and Europe in 2024, as a percentage of outstanding ratings (not volume), while U.S. defaults were highest in RMBS and CMBS led defaults in Europe. The ABS sector led upgrades in both the U.S. and Europe.
• By region, 2024 defaults were concentrated in the U.S. (897), with nine from Europe, five from Latin America, and none from other regions. Latin America had the highest downgrade rate at 8.4%.

16. Default, Transition, and Recovery: Consumer Products And Health Care Led Defaults In January, Feb. 13, 2025

• Global corporate defaults amounted to 10 in January 2025, the same number as in December 2024. U.S.-based issuers accounted for 70% of defaults in January.
• Consumer products and health care companies contributed to 50% of defaults in January.
• With €4.98 billion, the health care sector accounted for 62% of the defaulted debt amount in January.
• Distressed exchanges, which remain the primary reason for defaults, caused six defaults in January.

17. Liquidity Outlook 2025: Five Questions, Five Answers, Feb. 5, 2025

• Tensions between the Fed's dual targets of maximum employment and price stability could result in higher-for-longer interest rates.
• Net financial outflows pressure in China may weigh on the renminbi (RMB) and potentially amplify regional foreign exchange pressures.
• New funding options and an increased role for exchange traded funds (ETFs) should bring greater liquidity to private debt markets.
• The European Central Bank's (ECB) expectations for bank refinancing operations are not without risk for banks and the ECB itself.

18. Global Refinancing: Credit Market Resurgence Helps Ease Upcoming Maturities, Feb. 5, 2025

• Resurging debt markets retain sufficient capacity to meet upcoming refinancing demands--speculative-grade bond and loan issuance last year exceeds annual maturities for each year through 2028.
• Near-term maturities appear manageable, especially as speculative-grade obligations in 2025 fell by 50% over the past year and as investors bid up the price of 'CCC' category bonds that are maturing this year.
• Given the uncertainties around inflation and monetary policy, the easing in financing conditions for U.S. borrowers may have stalled.
• Borrowers with 'BBB' or 'BB' bonds in the U.S. and Europe stand to see funding costs rise by 170 bps-195 bps for those maturing in 2025 and 2026, if refinanced at recent new-issue yields.

19. Global Credit Markets Update | Q1 2025: Have Positive Rating Performance Trends Peaked Or Plateaued?, Feb. 3, 2025

• Downgrade ratios rose in Q4 2024, except in emerging markets. Asia-Pacific had the sharpest sequential rise, 13%-33%. North America rose to 57% from 47% but was still down from 65% in Q4 2023. Emerging markets fell 18 percentage points to 27%. Net cumulative rating actions (upgrades less downgrades) improved in 2024 but fell in Q4 due to more downgrades, of U.S. issuers.
• Net bias (positive less negative bias) trends were mixed. North America and emerging markets improved; Europe and Asia-Pacific fell from Q3. Emerging markets led the improvement, up 9.3 ppt year-on-year--only region to have a positive net bias reading by year end. Positive bias is highest among higher speculative-grade ratings ('BB' category), while negative bias remains concentrated among 'CCC' category and below. This implies further downward pressure at the lowest rating categories.
• The rising stars (upgrades to investment grade) tally outpaced fallen angels (downgrades to speculative grade) in 2024 -- 33 to 19. As of Dec. 31, 2024, the count of "weakest links" fell to 241, representing a nearly 30% decrease from 309 issuers a year before. This annual decline occurred despite December seeing the first uptick in 12 months.
• Corporate defaults finished the year at 145 in 2024, down from 153 in 2023. Up to 43% of total defaults were in media and entertainment (23 issuers), consumer products (22), and health care (18).
• Resurgent financing conditions for both broadly syndicated loans and high yields bonds brought issuance to over $1.2 trillion, exceeding rated annual maturities through 2029. With M&A continuing to languish, refinancing was the primary reason for the surge in issuance , with borrowers taking the opportunity to lower upcoming speculative-grade maturities through 2028.

20. Global Financing Conditions: A Mixed Picture As Uncertainty Builds, But The Issuance Forecast Remains Positive, Jan. 31, 2025

• We expect a 3% increase in global bond issuance this year, a more modest growth rate after last year's 20% jump.
• Because of the recent uptick in interest rates and inflation expectations, we have lowered our issuance forecasts for most sectors. But most long-term interest rates are still in the ranges that they've generally been in since mid-2023.
• There's the potential for increased volatility this year, in our view--both positive and negative. Positive contributors could include more mergers and acquisitions, or stimulative, debt-supportive measures in China. Headwinds could include higher inflation from new tariffs, or persistently high benchmark rates.

21. Default, Transition, and Recovery: The U.S. Speculative-Grade Corporate Default Rate Could Fall To 3.5% By December 2025, Feb. 20, 2025

• A resilient economy, sustained earnings growth, and a more manageable near-term refinancing burden lead us to forecast the U.S. speculative-grade corporate default rate will fall to 3.5% by December 2025.
• The default rate rose to 5.1% as of December 2024 mostly because of rising distressed exchanges, which we expect will remain popular as long-term interest rates remain high.
• In our optimistic scenario, we forecast the default rate could fall to 2.25% as interest rates fall faster than anticipated.
• In our pessimistic scenario, we forecast the default rate could rise to 6% as certain subsectors suffer from potential tariff increases and other political uncertainties.

Cross sector

22. Africa 2024 Credit Ratings Review: Positive Sovereign Momentum Trickled Down To Financial Services, Feb. 24, 2025

• Positive sovereign rating actions in Africa in 2024 more than doubled those we took in 2023.
• Although some economies benefited from stronger economic growth and reform momentum, the picture was mixed.
• Multilateral lending institutions' creditworthiness is generally strong because of the nature of their policy mandates and their robust balance sheets.

23. CreditWeek: What Will Added U.S. Tariffs Mean For China?, Feb. 14, 2025

• The Trump administration's levying of an additional 10% tariff on all Chinese imports—and Beijing's swift announcement of retaliatory tariffs—is a sign that the already tense relationship between the world's two biggest economies is unlikely to improve any time soon.
• It will also strike a blow to China's economy that we expect will lead to more fiscal and monetary stimulus this year.

24. Emerging Markets Monthly Highlights: Increased Uncertainty Stemming From U.S. Trade Policy, Feb. 12, 2025

• Increased uncertainty surrounding U.S. trade policy may delay investment decisions and impact emerging markets (EM) linked to countries that have been targeted by U.S. tariffs. EM central banks are likely to adopt a cautious approach to monetary policy normalization, as the U.S. dollar strength could exacerbate capital outflows if interest rates are cut too aggressively.
• The EM equity performance has been solid since the beginning of the year. However, following the U.S. election, all regions have lost ground, except for Europe, the Middle East, and Africa (EM EMEA), which is less threatened by tariff threats than EM Asia and Latin America (LatAm). Together with exchange-rate movements, the equity performance will be a key determinant of portfolio flows in 2025.
• Benchmark yields retreated from their December widening. Still tight corporate spreads fueled a strong speculative grade issuance month. Market activity was particularly solid in EM EMEA. Mainly fixed-rate issuance was denominated in hard currency. Trade tariff threats remain the main downside risk to financing conditions in EMs.

25. Credit Cycle Indicator Q1 2025: The Recovery Could Be More Elusive For Some, Jan. 15, 2025

• Our forward-looking credit cycle indicators (CCIs) continue to signal a potential credit recovery in 2025, reflecting rising leverage and accommodative financing conditions.
• The divide between the corporate and household sectors continues. Improving earnings growth and supportive market conditions are buoying corporate credit, while household credit is still undergoing a correction.
• Macroeconomic and geopolitical risks will test some markets more, spelling diverging recovery prospects across geographies.

26. Tariffs Will Hurt U.S. Consumer And Retail And Restaurant Companies--To Varying Degrees, And Depending On The Subsector, Feb. 13, 2025

• Broad-based tariffs could hurt more U.S. consumer products and retail companies this time around than in 2018. Over 24% of retail credits and 19% of consumer credits have negative outlooks, indicating an above-average negative bias and little headroom for additional macroeconomic pressures.
• Price increases will be harder to pass along to the consumer this time around because of the recent inflation cycle and already weak consumer environment.
• Given the heterogeneity and global supply chain footprint of the consumer products and retail and restaurant industries, examining the tariff impacts requires knowledge of each company's product, supply, and manufacturing mix. Subsector impacts vary widely depending upon this mix.
• Companies cannot rely solely on price increases to mitigate the extra costs imposed by tariffs and retailers will ultimately have to decide how much they can and will pass on to the end consumer.

27. Vietnam: Many Growth Drivers, Some Roadblocks, Feb. 25, 2025

• We see Vietnam's potential growth rate at 6%-7% for the next decade and perhaps beyond.
• Drivers include the rapidly expanding manufacturing base and the large pool of increasingly skilled workers.
• The economy faces many challenges, such as trade risks, and bridging infrastructure gaps to support growth.

Decentralized finance

28. Stablecoin Brief: Momentum Builds For U.S. Stablecoin Regulation, Feb. 19, 2025

• The debate about stablecoin regulation in the U.S. is progressing. Three proposals are currently under consideration.
• A regulatory framework could increase stablecoin adoption in the U.S. and help close the gap with Europe, where the Markets in Crypto-Assets Regulation came into force on June 30, 2024.

Economics

29. Economic Research: Asia-Pacific Economies Likely To Be Hit By U.S. Trade Tariffs, Feb. 24, 2024

• Our screening exercise shows that several Asia-Pacific economies could face higher U.S. tariffs under the U.S. administration's new Fair and Reciprocal Plan that targets bilateral trade surpluses, tariff differentials and other "imbalances."
• The large degree of discretion embedded in the plan makes it hard to predict the outcome. But the criteria indicates Vietnam, South Korea, Taiwan, India, Japan, and Thailand may be on the radar for U.S. trade actions.
• If imposed, tariff hikes could hit hardest for Vietnam, Taiwan, Thailand, and South Korea, based on their economic exposures to the U.S.

30. Economic Outlook Asia-Pacific Q1 2025: U.S. Trade Shift Blurs The Horizon, Nov. 25, 2024

• While China's stimulus measures should support growth, we expect its economy to be hit by U.S. trade tariffs on its exports. In all, we now project 4.1% GDP growth in 2025 and 3.8% in 2026; that's 0.2 percentage point (ppt) and 0.7 ppt lower than our forecast in September.
• Asia-Pacific growth will be impeded by slower global demand and U.S. trade policy. But lower interest rates and inflation should ease their drag on spending power. And in emerging markets, robust domestic demand growth is buoying GDP growth.
• Swings in capital flows driven by shifts in expectations about U.S. interest rates and trade policies require central banks to be vigilant and cautious. We expect Asia-Pacific central banks to take their time bringing policy rates down.

31. Economic Outlook Canada Q1 2025: Immigration Policies Hamper Growth Expectations, Nov. 26, 2024

• We expect GDP growth of 1.2% in 2024 (unchanged from previous forecast) before accelerating to 1.7% in 2025 (was 2.0%).
• A substantial deceleration in population growth next year as new immigration curbs take effect will counter any boost to the economy from lower borrowing costs. Stalling population growth will simultaneously reduce aggregate demand and the labor supply.
• We anticipate the Bank of Canada will remain on course to steadily cut rates until it reaches 2.25% by the middle of next year.
• The key risk for Canada's economy from the U.S. presidential election is that a Trump administration could pull out of the United States-Mexico-Canada Agreement, leaving Canada subject to any U.S. import tariffs.

32. Economic Research: Understanding The Decoupling Of Copper Prices And GDP Growth In Chile And Peru, Feb. 24, 2024

• Over the past two decades, copper prices and economic activity in Chile and Peru were closely linked, but a noticeable decoupling has emerged in recent years.
• Regulatory burdens and political fragmentation have hindered production growth in both countries. Peru faces additional challenges from limited exploration investment, social conflicts, and investor uncertainty, while Chile struggles with declining ore grades.
• Slowing productivity growth in Chile and Peru is tied to their inability to fully capitalize on high copper prices, limiting mining's potential to drive efficiency gains, competitiveness, and broader economic benefits.

33. Economic Outlook Emerging Markets Q1 2025: Trade Uncertainty Threatens Growth, Nov. 26, 2024

• A likely increase in trade protectionist policies among major economies will hurt GDP growth in most emerging markets (EMs) in the next couple of years, but the magnitude of the impact will depend on those policies' details, which will become clearer in the coming months.
• For now, we assume only a modest increase in tit-for-tat tariffs between the U.S. and China in 2025 and no new tariffs for the rest of the world, which would produce a relatively modest net impact on GDP in most major EMs outside of China.
• However, downside risks to our forecast are high, and potential tightening in financial conditions because of trade-related uncertainty adds another hazard.

34. Economic Outlook Eurozone Q1 2025: Next Year Will Be A Game Changer, Nov. 26, 2024

• We project eurozone GDP growth of 0.8% in 2024 and 1.2% in 2025, with Germany lagging eurozone peers, and Spain continuing to outperform. Changes to our previous forecast largely reflect revisions of past data. Due to a more pronounced drop in energy prices, we expect inflation will be marginally lower in 2025 than we had anticipated (2.4% versus 2.5% previously).
• A long period of very stable macroeconomic forecasts might come to an end as new leaders in the U.S., the EU, and Germany could take decisions early next year on tariffs, defense, and general spending that could reshape the economic outlook.
• We anticipate the European Central Bank (ECB) will cut rates more quickly than we had previously expected due to persistently weak confidence and better visibility on the disinflation trajectory. That said, we do not expect that the extent of the rate cuts will exceed our previous forecast. We now project that the main policy rate will reach 2.5% before the summer of 2025, compared with our previous expectation of September 2025.

35. Global Economic Outlook Q1 2025: Buckle Up, Nov. 27, 2024

• Even before taking office, a second Trump administration is already moving the macro-financial needle and raising downside risks for the global economy. The degree of ultimate policy implementation is a key unknown.
• Our preliminary policy read on the new U.S. administration is that positive growth effects will be minimal, inflation pressures will rise, and the Fed is likely to stop cutting rates earlier. This will lead to tighter financial conditions, a stronger dollar, and a more complicated macroeconomic picture elsewhere.
• Owing to a "wait and see" approach, our GDP growth forecasts have not moved much since the previous publication, other than incorporating changes related to base effects.
• Risks include the full implementation of the proposed U.S. agenda on taxes, trade, and immigration; the end of resilient consumer spending and labor demand; and bond market stress. AI is an upside.

36. U.K. Economic Outlook 2025: Monetary Policy And Trade To Offset Fiscal Impetus, Nov. 26, 2024

• After a slower second half this year, the U.K. economy looks set to gather steam on looser fiscal policy, with GDP rising by 1.5% in 2025 versus our September forecast of 1.2%, and maintaining a similar pace through 2027.
• But we now expect the Bank of England (BOE) to cut its rate only four times over the next quarters to 3.75% by the end of 2025, as a result of stronger jobs growth and inflation stemming from higher government spending.
• These factors will likely dilute the economic impulse of the policy stimulus at a time when geopolitical risks and the potential for trade frictions have increased following the U.S. elections, though the impact on the U.K. is minimal at this stage.

37. Economic Research: Announced Steel And Aluminum Tariffs Would Mean Little Change For U.S. GDP And Prices, Bigger Risks For Downstream Users, Feb. 13, 2025

• President Trump announced plans for a flat tariff of 25% on all U.S. imports of steel and aluminum, including on trade partners that had been granted exceptions in the past.
• Currently, our baseline U.S. economic forecast does not include the planned tariffs, but our early estimate finds that the direct impact on consumer prices and GDP would likely be modest--less than a tenth of a percentage point.
• If the announced tariffs escalate into a broader trade war, economic conditions could suffer, and we could revise down our macroeconomic forecasts as a result.
• While the tariffs should be positive for domestic steel and aluminum industries, they risk larger knock-on negative effects on downstream users of these metals, such as automakers, can manufacturers, packaging, and construction projects.

38. Economic Outlook U.S. Q1 2025: Steady Growth, Significant Policy Uncertainty, Nov. 26, 2024

• We forecast the U.S. economy to expand 2.0% in the next two years--incorporating partial implementation of Trump's proposed policies--following 2.7% growth this year.
• We expect the Federal Reserve to reduce the federal funds rate more gradually than what we had considered in our September forecast update and reach an assumed neutral rate of 3.1% by fourth-quarter 2026 (was fourth-quarter 2025 previously).
• Uncertainty around our forecasts is high given unknowns about how much of President-elect Trump's campaign promises will materialize.
• Trump's policy proposals from his campaign, at face value, could result in higher inflation in the near term and lower growth in the medium to long term. And the probability of a disruption to the Fed's easing bias over the next two years has risen.

Environmental, social, and governance

39. Sustainability Insights: Sustainable Bond Outlook 2025: Asia-Pacific Issuance Could Hit Record High, Feb. 24, 2025

• Asia-Pacific's sustainable bond market is poised to rebound.
• S&P Global Ratings anticipates record-high issuance of US$260 billion in 2025 through catalysts.
• Conversely, economic uncertainty, evolving trade policies, and geopolitical tensions may still weigh on issuance, as slower global demand hits growth in the region.

Financial institutions

40. Asia-Pacific Banking Country Snapshots: Most Banks Will Absorb U.S. Policy Volatility, Feb. 17, 2025

• 2025 will bring greater political maneuvering. This will hit households and businesses, and, in turn, banks.
• Asia-Pacific will be pulled into the strategic contest between the U.S. and China, including in regions without a strong allegiance to either country. Banks will experience secondary effects and will not be immune from volatility and uncertainty.
• While we expect credit losses across Asia Pacific will increase over the next two years we believe they will remain within tolerances for many banks at current rating levels.

41. Asia-Pacific Financial Institutions 1Q 2025 Monitor: Most Banks Will Absorb U.S. Policy Volatility, Feb. 17, 2025

• 2025 will bring greater political maneuvering. This will hit households and businesses and, in turn, banks.
• Asia-Pacific will be pulled into the strategic contest between the U.S. and China, including in regions without a strong allegiance to either country. Banks will experience secondary effects and will not be immune from volatility and uncertainty.
• While we expect credit losses across Asia-Pacific will increase over the next two years we believe they will remain within tolerances for many banks at current rating levels.

42. China AMC Brief: Looser Reins, Faster Pace, Feb. 20, 2025

• Beijing's transfer of controlling stakes in three asset managers will not weaken their ties to the central government, in our view.
• S&P Global Ratings believes the new structure will enhance the governance of the three AMCs, with no diminishment of state support.

43. Systemic Risk: Global Banking Regulation At A Crossroads, Feb. 18, 2025

• Global banks' credit profiles have largely benefited from tougher rules and supervision since the global financial crisis.
• The call for some simplification of rules, as well as a sense of regulatory saturation, seem inevitable. These factors would not necessarily weigh on bank ratings, at least in the short term, so long as the past decade's guard rails remain in place.
• A broader regulatory rollback, though not our base case today, could have more serious implications for bank ratings. Subordinating prudential objectives to broader political goals could sow the seeds of financial instability.

44. Systemic Risk: Global Nonbank Financial Institutions Press Ahead, Feb. 18, 2025

• As the global financial system continues rebalancing, nonbank actors are expanding faster than banks in almost all jurisdictions. More financial diversification can be positive for savers and borrowers, but this can also increase risks to financial stability and create challenges for regulatory authorities.
• NBFIs' resilience will be tested as downside risks to global macro-financial conditions rise. While nonbank credit providers' overall leverage is not high, those with higher leverage alongside asset and liability or maturity mismatches pose higher risks as a source of contagion and direct exposure.
• Direct and indirect linkages between banks and nonbanks are a key concern for financial stability. Although banks' direct NBFI exposures may appear low, the risk of contagion persists. We expect regulatory scrutiny to increase, while bank supervisors will continue to push for enhancements to banks' counterparty credit risk frameworks.
• NBFIs typically do not have access to central banks' lending facilities. Even though central banks could still intervene to address any market fallout from a potential nonbank failure, it is unlikely that they would directly provide liquidity to the affected nonbank credit provider.

45. Systemic Risk: Global Bank-Nonbank Nexus Could Amplify And Propagate Market Shocks, Feb. 18, 2025

• Banks and nonbanks are competing and converging in the financial system, as they offer credit intermediation while also providing funding to each other. Private credit exposures, in particular, have grown rapidly on the balance sheets of insurance companies, funds, and nonbank financial institutions (NBFI) lenders.
• The plethora of direct and indirect funding and liquidity connections between banks and nonbanks could amplify and propagate systemic risk.
• Current relatively benign funding conditions limit imminent financial stability risks, but geopolitical shocks could trigger renewed turbulence.
• In our view, major global banks have improved their counterparty credit risk management, due in part to increased regulatory probing, and collateral and good diversification by borrower type can further help mitigate their credit risks.

46. U.S. Banks Webinar Q1 2025: Cautious Optimism In A Changing Environment, Feb. 21, 2025

• While CRE remains a key risk for banks, we believe the likelihood that CRE loans will lead to a material weakening of the creditworthiness of rated banks has declined.
• The preponderance of rated banks are on stable outlooks, reflecting our expectations of continued good performance after some improvement in balance sheet strength recorded last year.
• Net interest income (NII) may grow depending on the pace of earning asset growth and the path of interest rates. Fee income may rise with increased merger activity, trading volumes, and rising wealth and asset management.
• The banking industry should generate a return on common equity of 10.5%-11.5% in 2025, compared with 11.3% in 2024, assuming continued economic growth. A greater-than-expected slowdown could pull returns into the single digits.
• We expect relatively stable earnings in 2025, with potential upside from NIM improvement and an acceleration in loan demand.

47. U.S. Banks Are Better Positioned To Manage Commercial Real Estate Risks, Feb. 20, 2025

• The probability that problems in CRE will lead to a material weakening in the creditworthiness of U.S. banks has declined.
• Although we expect CRE charge-offs to continue, due to a combination of CRE price stabilization and balance sheet improvement, even banks with more concentrated exposure to CRE loans should be able to better absorb such losses without substantially affecting earnings.
• Most banks we rate have increased their capital and deposits, and have reported declines in unrealized losses on securities, all supporting financial strength.

48. Systemic Risk: U.S. Banks' $1 Trillion In Loans To Nonbanks, Like Private Credit, Creates Risks And Rewards, Feb. 18, 2025

• U.S. banks' loans to nonbank financial institutions (NBFI), including private credit players, have grown rapidly to now exceed $1 trillion.
• This growth has fueled the expansion and revenue of several banks alongside further facilitating an increasingly large, competitive, and diverse NBFI industry. Banks' $770 billion of unfunded commitments points to further expansion in this space.
• In an indication of the interplay and interconnection between public and private markets, banks are largely lending to NBFIs such as private equity, credit funds, and nonbank lenders through subscription line facilities and collateralized warehouse financing.
• We believe rated banks have generally well-managed the risk on NBFI loans through conservative structuring, collateral requirements, and diversification. But the fast growth and close connections between traditional lenders and nonbanks could add to systemic risk and future asset quality challenges.

Healthcare and pharmaceuticals

49. Health Care Brief: German Hospital Reform Likely To Spur Market Consolidation, Feb. 17, 2025

• Large private hospitals in Germany will benefit from a stronger focus on specialization.
• German hospitals' operating conditions will remain challenging over the next 12-24 months due to slow and administratively cumbersome reimbursement and medical staff shortages.
• The hospital reform could provide some relief, but its implementation will be gradual and likely last until 2029.
• Hospital insolvencies remained high in Germany over the past two years, notably for non-profit and public hospitals. As a result, better capitalized and more profitable private groups could seize the opportunity and further consolidate Germany's hospital market.

Infrastructure

50. Japan Utilities To Rethink Financing With Changes To Bond System, Feb. 20, 2025

• Regulatory reforms on bond issuance at electric utilities in Japan will require us to consider additional factors when evaluating debt issues from April 2025.
• Over time, refinancing will reduce subordination risk for newly issued bonds associated with the reforms.
• The reforms will compel utilities to change how they manage their finances.

Insurance

51. Australia's Home Underinsurance Could Spread Risks, Feb. 24, 2025

• Australian insurers will likely keep raising home and contents premiums to improve margins and cover higher weather-related claims.
• Coverage for properties in high-risk areas will become scarce or come with exclusions and could rely on government schemes.
• Bank portfolios are underinsured. While unlikely to materially increase credit losses for now, this is a potential vulnerability.

Leveraged finance

52. CreditWeek: What Challenges Will U.S. Leveraged Finance Face In 2025?, Feb. 20, 2025

• For U.S. issuers rated in the speculative-grade category ('BB+' or below), 2024 marked another resilient year for credit-measure performance—the fourth in a row with median EBITDA growth (through the third quarter). Along with earnings growth, repricings and rate cuts have helped reported EBITDA interest coverage stabilize at around 2.3x, following a protracted decline from 3.6x in late 2022 through late 2023.
• Modest near-term refinancing needs, resilient credit trends, and growth in private credit are driving our constructive outlook for speculative-grade credit quality. But recovery rates for first-lien debt will likely remain under pressure as debt structures for speculative-grade companies have become more leveraged and top-heavy.

Metals and mining

53. Steel Brief: U.S. Tariffs To Hit Korean Producers Harder Than Regional Peers, Feb. 18, 2025

• U.S. plans to impose tariffs on all imported steel will be particularly painful for Korean steelmakers.
• The entities have long relied on a tariff exemption--up to a quota--on their U.S. sales.
• S&P Global Ratings believes the end of the exemption will likely hurt Korean entities' performance more than regional peers that have benefited less from this concession.

Oil and gas

54. Canadian Oil Producers Likely Resilient To Potential Tariffs, Feb. 18, 2025

• On Feb. 1, 2025, The U.S. President Donald Trump announced his intent to impose a 10% tariff on all Canadian energy imports. Originally set to take effect on Feb. 4, 2025, the president subsequently delayed imposing these tariffs until at least March 4 pending further negotiations.
• Many U.S. refiners rely on Canadian crude oil imports as refining feedstock, and most Canadian oil and gas producers have limited alternate sale markets and lack sufficient domestic refining capacity.
• Accordingly, we believe the financial burden of these tariffs will be shared by U.S. refiners (and ultimately U.S. consumers) and Canadian producers.
• However, a relatively weak Canadian dollar will limit top-line effects for Canadian producers, and the industry's overall low leverage will further support credit metric resilience and ratings.

Private markets

55. Systemic Risk: Private Credit’s Characteristics Can Both Exacerbate And Mitigate Challenges Amid Market Evolution, Feb. 18, 2025

• Our substantial credit estimate universe serves as a window for understanding private credit's performance—and its structural differentiators from public markets—while providing a unique view of credit quality for unrated entities whose loans are held in middle-market collateralized loan obligations (CLOs).
• Credit fundamentals for middle-market borrowers have improved against a backdrop of lower borrowing costs and earnings resilience since we conducted our stress test in 2023, resulting in healthier median interest coverage ratios, an extension of liquidity runway, and reduced pressure on margins and cash flow. But broader policy uncertainties pose risks to recent momentum, particularly for smaller and riskier entities.
• We expect documentation and covenant quality will continue to deteriorate in the upper-middle-market—but overall remain significantly more creditor-friendly than broadly syndicated loan (BSL) agreements.
• Payment-in-kind (PIK) and toggle options are a key flexibility distinguishing this space from public markets.
• The declining rate of credit estimate defaults crossed below its syndicated counterpart last year. However, larger companies are failing to meet their debt obligations, which could lead some sponsors to shift strategies if interest rates remain high.
• Lack of systemic transparency continues to be a drawback for private market participants, particularly from a pricing perspective.

56. Private Financings Gain In Popularity Among GCC Issuers, Feb. 17, 2025

• Private capital financings are becoming an important funding source for issuers in the Gulf Cooperation Council (GCC) region.
• For now, private financiers mainly focus on large transactions.
• Private capital financing can be an alternative funding source for companies that are underserved by banks.

Public finance

57. Credit FAQ: Implications Of The Debt Brake And Its Potential Loosening For Our Ratings On German States, Feb. 17, 2025

• In the run-up to Germany's upcoming snap election on Feb. 23, 2025, some policymakers have been debating a loosening of the country's "debt brake" rule.
• Under this rule, Germany's 16 regional states must, in principle, maintain fully balanced budgets, while the federal government's permissible annual structural deficit is limited to 0.35% of GDP. Higher deficits are, however, allowed in a cyclical downturn, or in the event of a natural catastrophe or similar crisis.
• The rule limits Germany's fiscal policy space and is said to have contributed to the collapse of the country's national government in late 2024.

58. Hong Kong’s Public Universities: A Comparative Analysis, Feb. 19, 2025

• The public university sector in Hong Kong generally displays the hallmarks of strong credit quality, with good market positions, strong financial performance, and ample financial resources.
• Market positions among the eight public universities are varied, mainly due to varying full-time equivalent (FTE) student enrollment scales and their different histories and areas of focus.
• Steady government subvention, consisting mainly of recurrent and capital grants, has been a major revenue source that meaningfully supports the universities' financial performance. This has underpinned their light historic debt burdens, which could change if borrowing appetite increases.
• Liquidity reserves are ample. With over 60% of liquidity from cash and cash equivalents as of end fiscal year 2023 (ending June 2023), their financial resources are generally sufficient even during periods of financial market swings. Investment income is volatile in nature and could occasionally lead to accounting losses in the sector, as occurred in FY2022. However, such events are overall neutral to operating margins.
• Compared with our rated peers (all in the 'AA' and 'A' categories in Australia, Canada and the UK), Hong Kong universities generally have stronger financial profiles. FTE enrollments, on the other hand, are relatively smaller in size and this somewhat weighs on their market positions.
• The likelihood of extraordinary government support would likely be differentiated according to the individual universities' roles to and linkages with the Hong Kong government (AA+/Stable/A-1+). Considerations may include but not be limited to their different international rankings, academic program offerings, and relevance to the city's development objectives.

59. U.S. Not-For-Profit Sector 2025 Outlook: Credit Quality Continues To Show Resiliency Despite Uncertainty, Feb. 24, 2025

• Credit quality for S&P Global Ratings rated U.S. not-for-profit entities remains stable owing to the continued operational recovery and growing financial resource strength across the sector.
• Consistent donor gifts and robust market returns in recent years have boosted endowments and investment pools, affording institutions greater flexibility to address current and future operating and strategic needs.
• Senior leadership teams have proven capable of effectively adapting to changing market demand for cultural and membership organizations.
• Despite cooling inflation from 12 months ago, most institutions face upward expense pressure partially due to continued labor market strength.

60. U.S. Public Finance Rating Activity Brief: January 2025, Feb. 21, 2025

• There were more than 210 rating actions in U.S. public finance (USPF) through Jan. 31, 2025.
• Overall, upgrades outpaced downgrades in the local governments and transportation sectors.
• Downgrades outpaced upgrades in the charter schools, education, public power, health care, utilities, and not-for-profit sectors.
• Through the end of 2024, unfavorable outlook revisions exceeded favorable outlook revisions.

61. Credit Risks Associated With Wildfires Are Increasing For California Public Finance Entities, Feb. 20, 2025

• In California, weather conditions that contribute to more destructive wildfire events as well as their spread into more urban areas are increasing in frequency and could raise the risk of financial and operational effects for U.S. public finance entities in the state and weaken creditworthiness.
• For not-for-profit (NFP) retail electric utilities, the operational management assessment, liquidity analysis, and peer comparison sections of our criteria are where we incorporate credit risks associated with vulnerability to wildfires.
• For our NFP retail water utilities, we incorporate climate vulnerability into our analysis through the asset adequacy, organizational effectiveness, and emergency preparedness sections of our criteria.
• For California local governments with component retail electric or water utilities, we believe they could face contagion risk should financial and litigation risks arise. Local governments could also face direct risks from wildfires, including infrastructure damage and depressed economic activity.

Real estate

62. Hong Kong Retail Landlords: A Choice Between Lower Rents Or Higher Vacancy, Feb. 19, 2025

• Hong Kong retail rents could be hit hard this year as the city continues to lose shoppers to competitive offerings across the border.
• Even market leaders will likely cut rents on new leases by 5%-10% this year to preserve occupancy.
• Our stress tests on rated landlords show hits to EBITDA, debt leverage, and fair value could start to snowball if occupancy also begins to tumble.

Sovereigns

63. Credit FAQ: GCC GRE Ratings Benefit From Government Support, Feb. 17, 2025

• We expect Gulf Cooperation Council (GCC) governments will maintain a controlling stake in most strategic government-related entities (GREs) and continue to provide extraordinary support if necessary. GREs play a crucial role in GCC sovereigns' diversification away from the hydrocarbon sector.
• We expect government and public investments will spur non-oil growth in the Gulf region to, on average, more than 3% over 2025-2028.
• To finance the required investments, we expect GCC GREs will raise more debt through domestic and regional banks, international capital markets, and by listing on regional equity markets.

Structured finance

64. ABS Frontiers: Asset-Based Finance Funds Are In Vogue, Feb. 24, 2025

• Private credit investment vehicles are diversifying beyond direct lending investments to include securitizations, fund finance facilities, and real assets, such as infrastructure and commercial real estate (CRE).
• While similar securitization technology may be used for both public asset-backed securities (ABS) and private asset-based finance (ABF) transactions, the latter generally have more bespoke collateral pools and may benefit from enhanced structural protections.
• There is growing interest in obtaining credit ratings for investment vehicles financing pools of ABF transactions, significant risk transfers (SRT), and fund finance facilities. Since the risk profile of individual transactions can vary widely across these exposure types, the investment vehicle's structural features and the manager's flexibility can influence our analysis.
• Key differentiators of credit risk across investment vehicles include the creditor class subordination structure and security package, refinancing risk in the capital structure, and documented structural protections, such as interest and principal coverage or portfolio investment tests.

65. Structured Finance U.S. And Canada ABS: 2024 Round-Up, Feb. 21, 2025

• 2024 asset-backed securities (ABS) issuance of $151.2 billion was dominated by auto-related issuance volume (70%), followed by credit cards (11%) and equipment (9%).
• ABS rating actions continued to be skewed to the positive side through Dec. 31, 2024, with upgrades (528) exceeding downgrades (31). The downgrades were concentrated in student loans (42%), subprime auto loans (35%), and manufactured housing (23%).

66. 2025 U.S. And Canada Credit Card ABS Review, Feb. 20, 2025

• We reviewed our ratings on 87 classes (37 series) of credit card receivables from 12 U.S. and three Canadian credit card asset-backed securities (ABS) trusts.
• Our ratings reflect our views regarding each trust's stable collateral performance, the credit card receivables' credit characteristics, and each series' structure and credit enhancement, among other factors.
• Our forward-looking view is for somewhat weaker collateral performance but stable ratings to continue over the next 12 months.

67. Servicer Evaluation Spotlight Report™: Servicers' Collection Skills Essential For Managing Delinquent Loans In A New Era, Feb. 24, 2025

• Early-stage mortgage delinquency rates have increased from their lows in 2021, and the role of collectors will be critical for servicers as these delinquencies rise.
• Loan delinquencies can result from borrower hardships related to inflationary pressures. These performance issues are often nuanced, idiosyncratic, and challenging to resolve.
• Default management has evolved since the last economic recovery. As new technology and more streamlined solutions have emerged, collectors are at risk of becoming less dynamic in their approach to resolving delinquencies.
• To manage delinquencies in this new era, servicers will need to assess and address any skill gaps in their collections staff.

68. U.S. Home Price Overvaluation At 10%, Feb. 22, 2025

• We assess that U.S. home prices are overvalued by 10% based on price-to-income, inventory levels, and price-to-rent metrics.
• Both home price appreciation and income-per-capita increased between the third and fourth quarters of 2024, though the HPI increase lagged the long-term average gain.
• The credit impact on U.S. RMBS continues to depend on the geographic distribution of the mortgage pools and the valuation dates of the properties backing the loans in those pools.

69. Market Insights: Sector Intelligence | Student Loan ABS, Feb. 21, 2025

• Default rates for private student loan (PSL) in-school (post-2009) transactions increased in 2024 as borrowers continued to be affected by inflation, higher interest rates and higher overall debt repayment obligations. However, we believe that the ratings on the transactions we rate--which are primarily backed by co-signed loans and are high investment-grade rated--will remain stable.
• Delinquencies and defaults in PSL refinancing transactions also increased during 2024 due to slower prepayments, higher inflation and higher overall debt repayment obligations. While there may be further deterioration in 2025, we believe that refinancing transactions' default rates will remain within our base cases, with no impact on ratings.
• Most of the PSL state authority (and state-affiliated) lenders have been making student loans for many years and have diligently maintained strong underwriting guidelines, leading to consistent loan performance. During 2024, we slightly adjusted our base-case default rate for some of these issuers to reflect the loan composition of the programs and additional performance data.
• Federal Family Education Loan Program prepayment speeds peaked in mid-2024 and have since shown significant decline. Lower prepayments rates are expected as borrowers have fewer options for refinancing out of their FFELP loans. We do not believe that ratings on bonds with longer legal maturity dates will be affected by lower prepayments. However, we expect that FFELP transactions with shorter-maturing classes may experience liquidity pressures depending on prepayment levels, which could result in rating deterioration.

70. U.S. Structured Finance Chart Book: February 2025, Feb. 21, 2025

• Middle-Market (MM) CLO ratings have shown impressive resilience, with less than 1% of total ratings lowered since 2020 despite credit estimate downgrades on companies in MM CLO collateral pools outpacing upgrades.
• If the CLO ETF market continues to grow at its current pace, it is possible that ETFs could increase CLO note price volatility in the case of a severe market dislocation.
• Given the speculation of potential spending cuts under the incoming Trump administration, we reviewed office space leased by the federal government. Some of 52% of these leases either expire or can be terminated through the end of 2028.
• With a wave of corporate securitization debt maturing over the next few years, we assessed the potential rating impact of hypothetical increases to refinancing rates for portfolio of investment-grade. Of the 16 securitizations tested, only 7 saw a decline in debt service coverage that was large enough to result in a reduction of the base-case anchor.
• 2025 looks set to be another banner year for CLO refi/reset issuance.

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The Ratings View:

We published the latest "The Ratings View", which spotlights key developments and asset class trends on a weekly basis, on Feb. 19.

This Week In Credit:

We published the latest "This Week In Credit", our data-driven research snapshot that provides forward-looking, actionable insights on weekly market-moving credit trends, on Feb. 24.