(Editor's Note: This research roundup features a curated compilation of the key takeaways from our most up-to-date thought leadership. This edition has been updated from the last roundup on May 23, 2025.)
This report does not constitute a rating action.
Key Takeaways
- We expect rated global systemically important banks (G-SIBs) will remain resilient and continue to record solid profits in 2025, despite a weaker economic outlook. Business diversification and scale will help G-SIBs navigate tougher credit conditions. In our base case, we expect G-SIBs’ profitability will decline but remain solid. We do not expect a meaningful deterioration in credit quality and believe most G-SIBs could absorb significantly higher losses.
- We expect the European trailing-12-month speculative-grade corporate default rate to reach 3.6% by March 2026--down from 4.1% through March 2025. 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. In our pessimistic scenario, defaults may reach to 5.25% through next March.
- The America First Trade Policy has thrown well-established supply chains into turmoil. Uncertainty over European businesses' trade relations with the U.S. won't dissipate any time soon. European businesses have a range of short-term coping strategies, but implementing these will come at a cost.
In this edition of Instant Insights, our key takeaways from recent articles include the following: our risky credits series covering Europe and emerging markets, our default rate forecast for European speculative-grade corporates and U.S. leveraged loans, and the effects of tariffs on sovereigns, U.S. leisure spending, European structured finance, and ABS and RMBS ratings in China. We dive into sustainable debt market maturities, the G-SIB monitor, Causal AI, global pharmaceutical companies, global multiline insurers, cyber risk for retailers, European firms, Indian financial institutions, Japanese major brokerages, European telcos, China’s LGFVs, as well as the effects of regulatory and supervisory reform on bank ratings, and takeaways from U.S. banks’ quarterly webinar. We also feature our 2024 annual default and rating transition study on corporates in emerging and frontier markets, abridged supranationals interim edition, structured finance chart books for the U.S. and EMEA, and real time economic data, oil and gas exploration and production companies, public power utilities, the implications of Supreme Court’s split verdict on charter schools’ credit ratings, and middle-market CLOs 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 Conditions Special Update: U.S.-China Tariff De-Escalation Brings Some Temporary Relief, May 15, 2025
Alexandre Birry, Paris, +44 20-7176 7108, alexandre.birry@spglobal.com
- In another twist, the U.S. and China sharply reduced bilateral tariffs on May 12, and enacted a 90-day pause to help facilitate a broad-based agreement.
- Market reaction was positive, but policy uncertainty remains high. We caution that more progress is needed to return to a semblance of trade policy normalization.
- The latest U.S.-China tariff moves are growth positive and, assuming they hold, would raise our GDP growth forecasts closer to our previous, March 27, 2025, forecast round.
- The global trade environment will continue to weigh on credit conditions even if some tail risks have eased, for now.
2. Global Credit Conditions Special Update: Ongoing Reshuffling, April 11, 2025
Alexandre Birry, Paris, +44 20-7176 7108, alexandre.birry@spglobal.com
- Trade tensions are threatening what has been a favorable credit conditions environment for most borrowers. The April 2 tariff announcements by the U.S.--and the subsequent escalation in the trade conflict between the U.S. and China--went far beyond what financial markets had imagined and exceeded our previous assumptions. If the paused U.S. tariffs are ultimately implemented in full, the economic fallout would be broad and deep.
- Market volatility and increasing investor risk aversion pose the most imminent risks to credit in this environment. Borrowers are having to pay up for financing and, worse, some lower-rated borrowers could be shut out of the capital markets.
- President Trump's 90-day pause of most tariffs didn't remove the uncertainty around what could ultimately occur. Unresolved trade tensions as the partial pause approaches its end could have a visible impact on credit quality.
3. Credit Conditions Asia-Pacific Special Update: U.S.-China Ties In Uncharted Territory, April 15, 2025
Eunice Tan, Singapore, +65-6530-6418, eunice.tan@spglobal.com
- Asia-Pacific credit conditions to deteriorate: The recent escalation in China-U.S. relations and uncertain U.S. trade policy are hitting growth and confidence in Asia-Pacific. With market volatility persisting, tighter financing conditions will compound liquidity strains. Taken together, these developments are negative for Asia-Pacific credit.
- Tariff risks linger: The threat and imposition of tariffs by the U.S. will slow global trade and confidence. The region's dependency on exports with China and the U.S. will have an outsized hit on manufacturers and small economies. Should the tariffs announced on April 2, 2025 resume for economies ex-China, the geopolitical and economic fallout will be deep.
- China's growth falters: Persistent tariffs on Chinese exports reduce competitiveness and new business investments. Real estate challenges and a gloomier backdrop will sap confidence further. Chinese exporters could cut prices to offload excess capacity. Pain among Asia-Pacific domestic manufacturers could intensify, hitting margins.
- Contagion risk spreads: U.S. trade policy uncertainty is causing risk aversion. In a flight to safety, lenders are demanding higher-risk premiums and turning selective. Riskier assets are seeing tighter financing access. Should sharp asset-repricing occur, it could worsen market volatility and constrict capital raising (even for investment grade issuers).
4. Credit Conditions North America Special Update: Tariff Turmoil, April 17, 2025
David C Tesher, New York, + 212-438-2618, david.tesher@spglobal.com
- The intensifying global trade tensions—including the escalation in trade conflict between the U.S. and China—are weighing on credit conditions in North America amid slowing economic activity and heightened investor risk-aversion.
- Sharply higher tariffs are a top concern for corporate borrowers, threatening to hurt profits for those exposed to imports and international markets.
- We estimate the chance of a U.S. recession at 35%, as price pressures and tariff uncertainty erode business and consumer sentiment and outlays. A sharper-than expected economic downturn in the region could cause more severe credit stress.
Aerospace and defense
5. Sector Review: U.S. Aerospace And Defense Sector Remains Resilient In Uncertain Times, May 20, 2025
Jarrett Bilous, Toronto, 1-416-507-2593, jarrett.bilous@spglobal.com
- Most U.S. aerospace and defense (A&D) issuers will maintain credit stability amid tariff- and government spending-related uncertainty.
- Limited direct exposure to tariffs reflects sales that are skewed toward U.S. customers and predominantly domestically sourced production inputs.
- Inflationary pressure could temper demand and limit the pass-through of input cost increases; however, still strong commercial aerospace industry fundamentals and defense-spending priorities, which notably support larger issuers, limit broad-based downside to credit ratios.
- Our preliminary sensitivity analysis to a weaker-than-expected 2025 indicates 70% of our rated A&D issuers are at low risk of negative rating actions and 12% are at high risk.
AI
6. Causal AI: How cause and effect will change artificial intelligence, May 27, 2025
Sudeep Kesh, New York, + 1 (212) 438 7982, sudeep.kesh@spglobal.com
- Causal AI aims to transform AI from a predictive tool to one that can explain events and solve problems by understanding the relationship between cause and effect, known as causality.
- Causal inference has its roots in philosophical ponderings (Aristotle, David Hume) and statistical methods (Robert Fisher), with significant contributions from Turing Prize winning computer scientist Judea Pearl.
- Causal AI has diverse applications across sectors and is expected to integrate with established AI models, playing a crucial role in the potential development of AI that is capable of human-level cognition, known as artificial general intelligence.
Autos
7. Asian Autos: Driving Through Rough Terrain, May 15, 2025
Claire Yuan, Hong Kong, 852-2533-3542, Claire.Yuan@spglobal.com
- S&P Global Ratings believes U.S. tariffs will meaningfully depress the profit and cash flow of Asian auto firms.
- Japanese and Korean carmakers will take a larger direct hit. Rating resilience will depend on their financial cushion and the effectiveness of mitigating measures.
- Declining demand, intense competition, and continued electrification will exacerbate the downside risks for the credit profiles of Asian carmakers.
8. U.S. Tariffs Place Another Straw On The Back Of China Carmakers, May 15, 2025
Claire Yuan, Hong Kong, 852-2533-3542, Claire.Yuan@spglobal.com
- China's auto sector will continue to contend with overcapacity, price wars, and growing demand for margin-dilutive electric vehicles.
- While the U.S. has significantly lowered its tariffs on China, the incremental tariff on imported vehicles and parts to the U.S will still strain the sector.
- Conditions are raising the downside risks for rated issuers, especially those that are more exposed to U.S. tariffs: Johnson Electric and Zhejiang Geely.
Chemicals
9. Asia-Pacific Agrochemical Brief: U.S. Tariffs Will Reshape Trade Flows, May 22, 2025
Anshuman Bharati, Singapore, 65-6216-1000, anshuman.bharati@spglobal.com
- U.S. tariffs will transform the global crop protection industry's trade patterns.
- Despite temporary disruptions, the sector continues to recover. As U.S. companies reduce their reliance on Chinese suppliers, India is set to capture a larger market share.
- We anticipate U.S. distributors will rebuild their inventories as demand increases.
10. Clarity Has Dimmed For The Titanium Dioxide Market, May 14, 2025
Matthew Terral, CFA, Englewood, 1-720-749-0680, matthew.terral@spglobal.com
- S&P Global Ratings anticipates flat to marginal growth and potentially weakening pricing in the titanium dioxide (TiO2) industry over the next few years following macroeconomic uncertainty across key end markets, including construction and automotive.
- Global plastics, which accounts for about 25% of end-market demand, and papers will experience flat to minimal expansion behind packaging, automotive, construction, and consumer goods demand.
- External factors including antidumping measures could benefit TiO2 pricing power while increased recession fears in the U.S. and globally raise market uncertainty.
- Several trends will influence pricing volatility, including raw material costs, geopolitical tensions, and a balance of oversupply due to additional production capacity.
Corporates
11. European Firms Navigate U.S. Trade Fog, May 22, 2025
Paul Watters, CFA, London, + 44 20 7176 3542, paul.watters@spglobal.com
- The America First Trade Policy has thrown well-established supply chains into turmoil.
- It is unlikely that most of the 185 countries subject to tariffs will be able to agree trade deals with the U.S. before the stay on these tariffs ends on July 9, 2025.
- Uncertainty over European businesses' trade relations with the U.S. won't dissipate any time soon.
- European businesses have a range of short-term coping strategies, but implementing these will come at a cost.
12. Corporate Results Roundup Q1 2025: Sentiment slumps and earnings estimates erode amidst tariff tensions, May 21, 2025
Gareth Williams, London, + 44 20 7176 7226, gareth.williams@spglobal.com
- The global Q1 2025 results season for rated nonfinancial corporates is 71% through, with results in for 1,827 companies that report quarterly. 92% of North American results are in, versus 52% in Europe and 50% in Asia. Given the potential impact of U.S. tariffs – planned, pending, and in-effect –what companies are saying about tariffs is gaining greater scrutiny than Q1 results themselves.
- Earnings call transcripts show a sharp deterioration in corporate sentiment. Greater pessimism is apparent across all regions and ratings categories, with Europe seeing the biggest deterioration at present, followed by Asia-Pacific and then North America. North American corporate sentiment has been more positive than other regions for the last several years, but tariff tensions have sharply eroded this differential, if not eliminated it. The impact on sectors varies by region, but relative pessimism is most apparent in industrial cyclical sectors (see pages 4-7 for more detail).
- Market consensus estimates for rated entity earnings have fallen. Globally, the average change in consensus estimates for FY 2025 local currency revenues and EBITDA between April 1 and May 21 is -0.8% and -2.1%, respectively (see pages 8-11 for more detail). Average estimates for capex have risen globally by 0.8% but have declined 0.1% in North America. The impact on forecasts varies significantly by industry, with relative resilience apparent in sectors like real estate and utilities, and greater pressure on cyclical and tariff-sensitive sectors. Consensus EBITDA forecasts have fallen for nearly all sectors in North America.
- Q1 results so far show a further upturn in actual revenues and EBITDA. 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 versus 1.3% in Q4, and EBITDA expanded 4.5%, up from 3.7% last quarter. Sector contributions are similar to last quarter, with media and technology leading, and oil and gas earnings the biggest drag on growth. Margins are still expanding for most sectors, and interest pressures continue to ease although financing concerns have risen amidst market volatility.
13. Supply-Chain Risk Trends – A Credit Perspective Update, April 23, 2025
Robert Baisa, New York, +1-212-438-5661, robert.baisa@spglobal.com
- As supply-chain risks have abated from their highs during the COVID pandemic, so too have supply-chain-related negative rating actions.
- The consumer products, capital goods/machines, and equipment sectors make up 45% of the ratings that were affected by supply-chain problems since 2020.
- Key supply-chain uncertainties include new global trade tariffs and trade protectionism, volatility from geopolitical rivalry and conflict, and lingering disruptions. While the effects of these uncertainties are difficult to predict, they will likely impact at some point the economics of established supply-chains and could affect creditworthiness.
14. Industry Credit Outlook: Tariffs cloud corporate earnings, March 20, 2025
Gareth Williams, London, 44-20-7176-7226, gareth.williams@spglobal.com
- The Q4 earnings season concluded against the backdrop of intense tariff-related anxiety. Uncertainty around the timing, scope, and duration of U.S. tariffs and retaliatory measures from other countries makes it difficult for companies to assess potential impacts. Against this backdrop, earnings calls comments represent a broad, if imperfect, survey of corporate sentiment regarding tariff-related risks.
- We have assessed comments from 533 rated companies globally with total revenues exceeding $10 trillion.
- Corporate guidance largely does not reflect tariff impacts, so worst case outcomes will cause substantial earnings revisions. Companies appear broadly sanguine and believe price increases, supply chain localization, and inventory movement will soften the blow.
- This round of tariff conflict is best understood as a third wave of supply chain volatility following U.S. tariff measures in 2018 and the COVID-19 pandemic. Many companies, particularly in the U.S., have localized supply chains and lowered exposure to China.
- The greatest risks are likely in sectors with deep supply chain integration across North America, such as autos and aerospace. Some raw material exposures are large enough as to make tariffs difficult to avoid without exemptions.
- The near universal intent to pass through higher tariffs via prices means either inflation will result or, if the pricing environment is more resistant, corporate profit margins will begin to feel pressured.
15. Rated Mexican Corporates Can Manage Economic Uncertainty And Industry Volatility, May 15, 2025
Humberto Patino, Mexico City, 52-55-50814485, humberto.patino@spglobal.com
- The uncertain shift in U.S. trade policy and the challenging economic landscape in Mexico have negatively affected prospects for investment, inflation, and consumption, which could ultimately pressure the Mexican corporate sector.
- Currently, tariffs do not have a direct impact on the companies we rate, since most are protected by the USMCA, but Mexican corporates will have to navigate weaker conditions and volatile industry dynamics.
- We expect no immediate rating actions given rated corporates generally show comfortable EBITDA and leverage headroom for the next 12 months.
- There is low refinancing risk on short-term debt maturities because of lean amortization schedules, which are concentrated among investment-grade entities.
Credit trends and market liquidity
16. Default, Transition, and Recovery: 2024 Annual Emerging And Frontier Markets Corporate Default And Rating Transition Study, May 23, 2025
Luca Rossi, Paris, +33 6 2518 9258, luca.rossi@spglobal.com
- Defaults declined to their lowest level since 2017 for emerging and frontier markets (EMFM). Cumulative default rates (one- and three-year) across sectors were well below their median values in 2024.
- All 12 defaults in 2024 came from Latin America, including five re-defaulters. Stressed liquidity amid difficult idiosyncratic factors and macroeconomic challenges led to several distressed exchanges (half of defaults).
- The credit quality of S&P Global Ratings' emerging and frontier markets portfolio broadly improved over 2024, with an upgrade rate of 10.8% (versus 11.7% in 2023) and the downgrade rate falling to 3.6% (versus 4.9% in 2023). Improvement stemmed from supportive domestic demand developments and relatively stable global trade and financing conditions.
- Our one-year corporate Gini coefficients for emerging (EM) and frontier markets (FM) (a measure of ratings performance) increased for the second year in a row to 76.80% and 81.01%, respectively.
17. Emerging Market Risky Credits Number Drops Amid Market Slowdown, May 28, 2025
Luca Rossi, Paris, +33 6 2518 9258, luca.rossi@spglobal.com
- The number of issuers rated 'CCC+' and lower fell to nine as of April 2025 (6.5% of speculative-grade issuers) from 15 in January following Argentina's upward transfer and convertibility (T&C) assessment revision. Three of the nine risky credits had a negative outlook.
- No 'CCC+' and lower rated issuance was recorded over the past three months as tariff-related market turmoil triggered a sharp rise in borrowing costs, particularly for speculative-grade rated companies.
- Rated 'B-' and lower maturity peaks in 2027 with $3.8 billion, mostly in Latin America. Telecom and transport displayed the highest concentration of upcoming debt.
18. European Risky Credits: Signs Of Stability Amid Sectoral Strain, May 28, 2025
Ekaterina Tolstova, Frankfurt, +49 173 6591385, ekaterina.tolstova@spglobal.com
- As of April 30, 2025, the total number of risky credits in Europe stood at 49, slightly below the five-year average of 52 and close to the total of 48 as of Jan. 31, 2025.
- The risky credits cohort has increased by eight since Jan. 31, 2025, with new entrants comprising issuers facing refinancing or liquidity challenges (3), newly rated issuers (2), issuers facing operational issues (2), and one issuer we upgraded after a post-default restructuring.
- In contrast to the three months ended Jan. 31, 2025, removals from the risky credits category exclusively resulted from defaults and rating withdrawals, rather than upgrades. This indicates ongoing pressure for lower-rated issuers.
- By number, close to 30% of all risky credits are concentrated in the chemicals, packaging, and environmental services (CP&ES) sector and the media and entertainment sector. Telecommunications, CP&ES, and utilities accounted for 50% of risky credits' total debt.
19. Default, Transition, and Recovery: The European Speculative-Grade Default Rate Could Ease Slightly To 3.6% By March 2026, May 23, 2025
Nick W Kraemer, FRM, New York, + 1 (212) 438 1698, nick.kraemer@spglobal.com
- We expect the European trailing-12-month speculative-grade corporate default rate to reach 3.6% by March 2026--down from 4.1% through March 2025.
- 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.
- Recent 90-day tariff pauses have led to primary markets opening up again, though slowly. Speculative-grade entities in Europe are also benefiting from a modest amount of pending maturities, easing the need for widespread market access for refunding of debt.
- If the proposed tariff levels of April 2 are implemented after the 90-day pause or if the situation escalates through potential retaliatory tariffs by the EU, the disruption to economies could result in our pessimistic case for defaults ahead (5.25% through next March).
20. Global Tariff Tracker: Rating Actions As Of May 16, May 20, 2025
Credit Markets Research, New York, 1-212-438-1396, cmr@spglobal.com
- Tariff-driven rating actions are limited thus far, with 21 globally as of May 16, 2025.
- Rating actions include six downgrades (two accompanied by a negative outlook), five CreditWatch negative placements, and 10 outlook revisions to negative.
- Actions are primarily concentrated in the consumer products (10) and retail/restaurants (three) sectors, with the remainder spread evenly across other sectors. Of the 21 issuers affected, 18 are based in North America, and three are from Europe.
21. Default, Transition, and Recovery: 2024 Annual Taiwan Structured Finance Default And Rating Transition Study, May 20, 2025
Brenden J Kugle, Englewood, + 1 (303) 721 4619, brenden.kugle@spglobal.com
- There were no rating actions among Taiwan structured finance ratings in 2024.
- Among the 95 ratings assigned since the start of 2003, there have been five defaults, making the overall lifetime default rate 5.3%.
- The lifetime upgrade rate is 47.4%, and the lifetime downgrade rate is 11.6%.
22. Default, Transition, and Recovery: 2024 Annual Taiwan Ratings Corp. Corporate Default And Rating Transition Study, May 20, 2025
Nick W Kraemer, FRM, New York, + 1 (212) 438 1698, nick.kraemer@spglobal.com
- There were no defaults among corporate issuers rated by Taiwan Ratings Corp. (TRC) for the eighth straight year in 2024.
- The stability rate of TRC's ratings was 88.4%, down from the all-time high of 93.2% in 2023 but still above the weighted average of 80.3% for 1999-2024.
- TRC's ratings continue to clearly correspond with the likelihood of default, with default rates among investment-grade ratings well below those among speculative-grade ratings across all time frames, consistent with S&P Global Ratings' global scale ratings.
23. Default, Transition, and Recovery: The U.S. Leveraged Loan Default Rate Could Rise To 1.75% Through March 2026, May 23, 2025
Evan M Gunter, Montgomery, + 1 (212) 438 6412, evan.gunter@spglobal.com
- We expect the U.S. leveraged loan default rate to rise to 1.75% by March 2026, from 1.23% in April 2025, as economic uncertainty and market volatility weigh on highly leveraged borrowers.
- Unpredictable policy and results broaden potential outcomes, from a 3.5% default rate in our pessimistic scenario to 1.0% in our optimistic scenario.
- Favorable conditions in the first quarter enabled many borrowers to refinance, putting them on more solid footing.
- However, diminished liquidity and slower issuance may weigh on some borrowers, especially those susceptible to tariffs and supply chain disruptions.
24. Credit Trends: The U.S. Speculative-Grade Corporate Default Rate Could Reach 4% By March 2026, May 21, 2025
Nick W Kraemer, FRM, New York, + 1 (212) 438 1698, nick.kraemer@spglobal.com
- Strains on financing conditions, economic output, and corporate planning as a result of increased tariffs could keep the default rate near current levels of roughly 4% through March 2026.
- If the current tariff pauses and levels last, we could see defaults fall in line with our prior assumptions from previous quarters, or even fall to an optimistic outcome of 3% by next March.
- However, if the final tariff levels are high, or negotiations remain ongoing, an uptick in uncertainty after midyear could lead to our pessimistic projection of a 5.5% default rate through next March.
- With much of the speculative-grade population reliant on consumer spending, downside risks prevail, and increased delinquency rates and a prolonged period of high interest rates across multiple credit channels could erode consumer confidence in the face of tariff uncertainties.
Cross sector
25. Ten Charts That Matter For Asia-Pacific Trade, May 20, 2025
Eunice Tan, Singapore, +65-6530-6418, eunice.tan@spglobal.com
- Asia-Pacific's significant intra-region trade reflects its deep supply chain interlinkages. These may increasingly fragment and reconfigure.
- Tariff and trade tensions complicate the region's trade flows and supply chain landscape. Meanwhile, currency volatility could hit export competitiveness.
- A structural shift in trade flows means some producers will revisit supply chains and business models.
26. Asia-Pacific Sector Roundup Q2 2025: Trade Complications Could Disturb Still Waters, March 27, 2025
Eunice Tan, Singapore, +65-6530-6418, eunice.tan@spglobal.com
- A complicated trade and macro landscape: Asia-Pacific sectors could face a complicated credit landscape amid higher trade tensions. Higher trade barriers may disrupt supply chains and slow growth. Auto, metals, pharma and technology face a direct hit from U.S. tariffs. Fears of a sharper global downturn could hit demand and confidence, squeezing the region’s downstream and consumer discretionary sectors (e.g., consumer goods, gaming, and retail).
- Pressure on revenues and financing conditions: A hit to demand could erode corporate revenues, which narrows credit headroom. Banks could face lower asset quality and thereby tighten lending appetite. If risk-off sentiment intensifies, lenders may demand higher risk premia. This may upend the region's accommodative financing conditions as markets turn more volatile. Defaults may rise.
- Skewed outlook bias distribution: The net rating outlook bias improved to negative 2% as of March 2025 (Nov. 2024: negative 4%), following downgrades on New Zealand public finance issuers. The negative bias is largest for chemicals, building materials, retail, transportation cyclical, and real estate.
27. Banks Can Help, Not Fix, Shandong's LGFV Issues, March 16, 2025
Jason Ku, Hong Kong, +852 25328067, jason.ku@spglobal.com
- Shandong's reliance on funding from city and rural banks is greater than the national average. Nevertheless, these banks are typically less well capitalized than national banks, which could make them more vulnerable to credit shocks.
- The central government implemented stabilization measures and bolstered regulatory frameworks over the past few years; we believe the steps will enhance the asset quality and lending capacity of Shandong banks, increasing their resilience.
- While banks with reasonable capital buffers and asset quality can effectively support growth without straining local governments, lenders in Shandong's rural and economically weaker areas are more vulnerable.
28. Emerging Markets Monthly Highlights: Shifting Trade Winds Provide A Breather, May 15, 2025
Elijah Oliveros-Rosen, New York, +1-212-438-2228, elijah.oliveros@spglobal.com
- The bilateral reduction in tariffs between the U.S. and China provides near-term relief for emerging markets (EM). The associated reduction in risk aversion and volatility improves the financial markets backdrop for EM issuers. However, despite this tariff climbdown, there is still significant uncertainty over U.S. trade policy, as bilateral tariff negotiations with other countries continue. This uncertainty alone could continue to hold back investment across EMs.
- Brent crude price fell $15/bbl year to date 2025 amid demand concerns and rising OPEC+ output. S&P Global Ratings revised its oil price forecast down by $5/bbl. Lower oil prices, along with a weakening U.S. dollar, may support disinflation in most EMs, as their currencies have generally appreciated year to date.
- EM benchmarks mildened in April, while corporate yields increased, more pronouncedly among the speculative-grade rated entities. Corporate spreads recorded an abrupt widening in the first week after April 2 announcements and retrenched mildly during the following ones. The tariff turmoil hit market activity outside China, which more than halved with respect to last month. Greater China's monthly bond issuance rose by 22%, particularly among financial institutions and utilities.
29. Credit FAQ: Retailers' Cyber Attack Recovery Is Slowed By Logistical Scale And Complexity, May 23, 2025
Raam Ratnam, CFA, CPA, London, 44-20-7176-7462, raam.ratnam@spglobal.com
- Cyber incidents are an increasingly prominent risk for retailers due to the continued growth of e-commerce and the digitalization of supply chains, operations, and customer-facing systems.
- U.K.-based supermarket and retailing chains Marks and Spencer PLC (M&S; BBB-/Stable/A-3) and the Co-operative Group Limited (Co-op; BB/Stable/--) are the high profile victims of the more recent cyber attacks in among our rated issuers in the retail sector.
- The events, and the companies’ ongoing remediation efforts, raise questions about the susceptibility of retailers to cyber incidents and the efficacy of different responses and preventive strategies.
30. CreditWeek: How Will The U.S.-China Trade De-Escalation Affect Macro-Credit Conditions?, May 16, 2025
Alexandre Birry, Paris, + 44 20 7176 7108, alexandre.birry@spglobal.com
- The U.S.'s imposition of tariffs on major economies has hurt business confidence.
- In our view, this week's U.S.-China tariff de-escalation brings only temporary relief to the global trade environment—with upside for the macroeconomic picture, alongside prolonged pressure on credit conditions and our rating outlook at large.
- Beyond tariffs, we are witnessing significant changes in the geopolitical landscape. The U.S.'s evolving international role will likely have profound effects on the post-World War II globalized economy—with interlinked implications on geopolitics, trade, the technological revolution, energy and climate policy, and beyond.
31. Credit Cycle Indicator Q2 2025: Macro Headwinds Could Hinder Credit Recovery, March 20, 2025
Vincent R Conti, Singapore, + 65 6216 1188, vincent.conti@spglobal.com
- Our global credit cycle indicator (CCI) continues to signal a credit recovery this year. However, geopolitical and trade tensions, and growth concerns, amid increasing policy uncertainties, could stall or derail the upturn.
- The corporate sector, thanks to supportive market conditions, has shown stronger upward credit momentum. Households continue to grapple with squeezed purchasing power and subdued sentiment.
- The divergence across regions and geographies remains, suggesting different credit trajectories.
32. Cyber Brief: U.S. Infrastructure Faces Evolving Threats And Federal Policy Uncertainty, May 20, 2025
Tiffany Tribbitt, New York, + 1 (212) 438 8218, Tiffany.Tribbitt@spglobal.com
- Sovereign-sponsored and politically motivated cyber attacks on critical infrastructure in the U.S. have become more frequent, resulting in a heightened risk of infrastructure failures that could cause significant economic disruptions and loss of life.
- U.S. infrastructure providers' preparedness for such attacks, which are often sophisticated compared to more common cyber criminality, is inconsistent due to differing federal regulations and ownership. At the same time, the level of continued federal support for government cyber security institutions is uncertain.
Economics
33. Global Macro Update: Seismic Shift In U.S. Trade Policy Will Slow World Growth, May 1, 2025
Paul F Gruenwald, New York, + 1 (212) 437 1710, paul.gruenwald@spglobal.com
- A seismic and uncertain shift in U.S. trade policy has roiled markets and raised the specter of a global economic slowdown. As a result, we have updated our macro view.
- The jump in U.S. import tariffs, trading partner retaliation, ongoing concessions, and subsequent market turbulence constitute a shock to the system centered on confidence and market prices. The real economy is sure to follow, but by how much?
- We have again lowered our GDP growth forecasts for most countries and raised our inflation forecast for the U.S. We see a material slowdown in growth, but do not foresee a U.S. recession at this juncture.
- The risks to our baseline remain firmly on the downside in the form of a stronger-than-anticipated spillover from the tariff shock to the real economy. The longer-term configuration of the global economy, including the role of the U.S., is also less certain.
34. U.S. Real-Time Data: No material deterioration in activity (yet), May 23, 2025
Satyam Panday, San Francisco, + 1 (212) 438 6009, satyam.panday@spglobal.com
- Uncertainty is high, sentiments sour, and the business activity outlook remains very pessimistic. But this has not translated into meaningful deterioration of real-time current activity data.
- Weekly economic index and retail sales remain solid.
- Domestic travel and hotel bookings have held up despite headline fear.
- U.S. industrial output and utilization lag pre-pandemic levels, and economywide shortages since the pandemic have not normalized yet and look to continue with trade/tariff constraints.
- Following the U.S.-China trade truce, container ship movements appear to have found a floor (for now) after a sharp climbdown from tariff frontrunning.
35. U.S. Labor Market Snapshot: Holding The Line, But Headwinds To Test Resilience, May 14, 2025
Satyam Panday, San Francisco, + 1 (212) 438 6009, satyam.panday@spglobal.com
- The U.S. labor market remained resilient through April, but headwinds are likely to intensify.
- The uncertainty and tariffs' toll, roll-back of immigrant supply, and public- sector spending cuts are key impediments to employment growth.
- The aging population (especially in the absence of favorable immigration policy) and accelerated cyclical slowdown would plague the labor market in the coming quarters.
- The Fed’s dilemma is that a conflict is brewing starting in the second quarter between its stable inflation and full employment mandates.
36. U.S. Economic Outlook Update: Higher Tariffs And Policy Uncertainty To Weaken Growth, May 1, 2025
Satyam Panday, San Francisco, + 1 (212) 438 6009, satyam.panday@spglobal.com
- A working assumption of sharply higher U.S. average effective tariff on imported goods as well as the persistent unpredictability of policy have led us to update our U.S. macroeconomic forecasts.
- According to our new baseline forecast, the U.S. economy will expand 1.5% and 1.7% on an annual average basis in 2025 and 2026, respectively, (down from 1.9% in our March forecast), with domestic demand (GDP excluding net exports) growing at a less than 1% annualized pace for the rest of this year.
- The tariff-induced price shock would raise core consumer price inflation to 4.0% by the end of this year, while lower oil price assumption should put a lid on headline inflation at 3.5%.
- The unemployment rate will drift higher as weaker growth takes hold, potentially peaking at 4.7% in the first half of next year, despite curbs on immigration and a rise in deportations slowing labor force growth.
- We anticipate the Federal Reserve to ease by 50 basis points in the final quarter of 2025, when greater downside risk to employment begins to outweigh the upside risks to its inflation outlook.
Environmental, social, and governance
37. Peak Near-Term Sustainable Bond Maturities Appear To Be Manageable, May 23, 2025
Sarah Limbach, Paris, 33-14-420-6708, Sarah.Limbach@spglobal.com
- The sustainable debt market has sufficient liquidity, in our view, to meet near-term refinancing needs, even if issuance slows down in 2025. Rated issuance in each of the past five years was close to double the amounts scheduled to mature annually over the next five years.
- Sustainable bond maturities currently peak in 2026, at $389 billion, with medium-term debt issued in and around 2019 coming due along with recently issued shorter-term debt.
- Green bonds saw record issuance in 2024 and now represent 55% of the sustainable debt maturing through 2029. Their dominance in this market will persist.
Financial institutions
38. Credit FAQ: Australian Banks Will Take AT1 Phase-Out In Their Stride, May 15, 2025
Nico N DeLange, Sydney, 61-2-9255-9887, nico.delange@spglobal.com
- We are not changing our issuer credit ratings or hybrid ratings on Australian banks despite a projected decline in our risk-adjusted capital (RAC) ratios due to the phase-out of additional Tier 1 (AT1) hybrid instruments.
- Starting in 2027, the Australian banking regulator will reclassify AT1 instruments as Tier 2 capital.
- This reflects a view that the instruments are widely held by retail investors, and that it would be highly challenging for the regulator to successfully convert AT1s to loss-absorbing capital, even in a stress scenario.
- The ultimate view is that the instruments may not be useful for absorbing losses on a going-concern basis, and therefore not effective in saving a faltering bank.
- The reclassification creates complications. We only include AT1 capital instruments in the RAC ratio for banks so long as they are treated as Tier 1 capital by the regulator, which will no longer be the case at the start of 2027.
39. China Banks: Property Stabilization Won't Be A Cure-All, May 16, 2025
Chris M Lee, Hong Kong, 852-2533-3519, chris.mingtai.lee@spglobal.com
- A likely stabilization of the property market in China's larger cities will help the megabanks, most joint-stock banks, and regional banks in these cities.
- We see challenges for regional banks in lower-tier cities where recovery is lagging.
- The China-U.S. trade conflict could bring additional uncertainties to recovery of the property sector.
40. G-SIB Monitor 2025: Powering Through, May 27, 2025
Nicolas Charnay, Paris, +33623748591, nicolas.charnay@spglobal.com
- We expect rated global systemically important banks (G-SIBs) will remain resilient and continue to record solid profits in 2025, despite a weaker economic outlook. Business diversification and scale will help G-SIBs navigate tougher credit conditions.
- Our outlooks on all G-SIB ratings are stable. In 2024, we upgraded two G-SIBs and downgraded one. Our ratings on G-SIBs’ operating companies range from ‘A-’ to ‘AA-’.
- Ongoing tariff uncertainty may trigger several macro-financial shocks, which could affect global financial institutions’ risk profiles. We expect the most direct effects on G-SIBs include lower M&A volumes--which, in the case of banks with capital markets operations, can be offset by an increase in trading volumes--higher proactive credit provisioning, and lower lending growth.
- In our base case, we expect G-SIBs’ profitability will decline but remain solid. We do not expect a meaningful deterioration in credit quality and believe most G-SIBs could absorb significantly higher losses. G-SIBs will continue to focus on their strategic priorities, namely building scale within their home region, diversifying revenues toward non-banking products, and boosting their efficiency via technological upgrades.
- Potential regulatory changes to improve competitiveness and simplify rules would not weigh on ratings, as long as key guardrails remain in place. Over the long term, however, regulatory fragmentation could increase costs and business model complexity for those G-SIBs that are most internationally active.
- The fast growth of private credit has spurred many banks to take strategic action to service or partner with key players in that space. Beyond the business opportunity, increasing interdependencies also raise contagion risks. G-SIBs’ risk management will be central in this regard.
41. Indian Government-Owned Financial Institutions: In The Fast Lane, May 26, 2025
Geeta Chugh, Mumbai, +91 22 33421910, geeta.chugh@spglobal.com
- The policy role to support economic development will strengthen market share for many of India’s financial sector government related entities (GREs).
- Loan growth will sustain at about 15% per annum over the next two years aided by mandates to drive the development of strategic sectors.
- We expect credit costs to rise slightly over the next two years for many GREs as their loans season, recoveries dwindle, and benefit of excess provisions created in previous years tails off.
- Government linkages provide financial flexibility, access to cheaper funding and a mechanism for asset quality support.
- Regulations for GREs are gradually converging towards other financial companies, though some differences persist.
42. Japan Major Brokerages: Trials Suddenly Loom, May 28, 2025
Satoru Matsumoto, Tokyo, 81-3-4572-6267, satoru.matsumoto@spglobal.com
- Japan's major securities groups will likely come under increased pressure on performance given ongoing high market uncertainty.
- This environment also provides opportunities to see their progress in transitioning to sustainable growth business models.
- The groups saw significant profit growth in fiscal 2024, especially in retail business, amid favorable conditions.
43. Korea Banking Brief: Higher Deposit Protection Could Fuel Competition, May 15, 2025
Daehyun Kim, CFA, Hong Kong, 852-2533-3508, daehyun.kim@spglobal.com
- Korea's banking system should become more stable on higher protection limits for deposits.
- The move is likely to strengthen customer confidence and reduce the risk of a deposit-run in a stress scenario.
- That said, we believe nonbank deposit-takers could fuel competition with banks by offering higher rates to entice depositors.
44. U.S. Banks Webinar Q2 2025: Relative Stability Despite Economic Concerns, May 22, 2025
Devi Aurora, New York, + 1 (212) 438 3055, devi.aurora@spglobal.com
- The preponderance of rated banks are on stable outlooks, reflecting our expectations of relatively good performance and balance sheet stability.
- Earnings rose sequentially and year-over-year with stable provisions and flattish net interest margins (NIM). Despite near-term challenges, we expect relatively solid earnings in 2025 on some revenue expansion and limited expense growth.
- Net charge-offs and nonperforming loans have increased over the last two years but were generally consistent in recent quarters. Multifamily and commercial and industrial loans primarily drove higher nonaccrual balances over the last year.
- After building capital over several quarters, most banks reported limited sequential changes in their CET1 ratios in Q1 2025. We expect limited movement in capital ratios until potential updates to regulatory capital requirements become clear.
- Deposits rose more than 1% sequentially in Q1, and non-interest deposits have largely stabilized. Deposits are about 2% below their Q1 2022 peak, but a slowing of the Fed's quantitative tightening could support growth.
- The Trump administration and its nominees to lead bank regulatory agencies have suggested they will pursue many changes to bank regulation and supervision, but important details remain unclear. How such changes affect our ratings will depend on their magnitude, details, and our view of how they balance efficiency and effectiveness versus simply easier oversight.
45. Credit FAQ: What Regulatory And Supervisory Reform Could Mean For U.S. Bank Ratings, May 22, 2025
Brendan Browne, CFA, New York, + 1 (212) 438 7399, brendan.browne@spglobal.com
- The Trump administration and its nominees to lead bank regulatory agencies have suggested they will pursue many changes to bank regulation and supervision, with the Treasury playing a major role.
- Many details remain unclear, and the lengthy and complex reform process probably will not accelerate until after the nominees to lead the Office of the Comptroller of the Currency (OCC) and supervision at the Federal Reserve receive Senate confirmation and take office.
- How changes to bank regulation and supervision ultimately affect our ratings will depend on their magnitude, details, and our view of whether they balance efficiency and effectiveness versus simply easier oversight. It will also depend on how banks respond to changes--perhaps with greater risk taking or weaker financial management.
46. Are U.S. Banks Recession Ready?, May 20, 2025
Stuart Plesser, New York, + 1 (212) 438 6870, stuart.plesser@spglobal.com
- We anticipate further additions to U.S. banks' credit loss allowances in the coming quarters, after only small increases between fourth-quarter 2024 and first-quarter 2025.
- In our baseline forecast, we project the industry's allowance-to-loans ratio and provisions will rise about 5 bps and roughly 10%-15% respectively in 2025, reflecting an economic slowdown, but we still assume an industry return on equity of 10.0%-11.0%.
- If the U.S. enters a mild to moderate recession amid tariff uncertainty, we think bank allowances and provisions would rise above these levels but the profitability decline should be manageable
- In a more severe recession, some banks' earnings could be hit harder than others, resulting in potential negative rating actions.
Health care and pharmaceuticals
47. Global Pharmaceutical Companies Ratings Are Unlikely To Be Highly Disrupted By Rising Risks, May 27, 2025
Tulip Lim, New York, 1-212-438-4061, tulip.lim@spglobal.com
- The Trump Administration has issued two executive orders outlining its priorities for reducing drug prices. The President has also discussed extending tariffs to pharmaceutical products. If and how these priorities are translated into law and administrative actions will determine their impact on pharmaceutical companies and credit quality.
- Given broad and bipartisan support for drug-price reform, our base case expectation is that some combination of initiatives will proceed into law but we expect the combined impact to be only moderate. It’s still unclear which companies may be most affected and whether this may pressure ratings.
- MFN is not factored into our ratings or forecasts and we believe that implementing a most favored nation (MFN) pricing mechanism, as proposed, would be highly negative to the branded pharmaceutical industry’s credit quality.
- Potential tariffs could put margin pressure on branded drugs and generic pharmaceutical companies, depending on how they are enacted and the company’s footprint.
- Certain initiatives to spur more competition to branded drugs from generic drugs could be negative for generic companies’ credit quality.
Infrastructure
48. The Pace Of North American Regulated Utilities’ Common Equity And Hybrids Issuance Stalls, Raising Concerns For Credit Quality, May 15, 2025
William Hernandez, Dallas, 1-214-765-5877, william.hernandez@spglobal.com
- North American investor-owned regulated utilities set record highs for both common equity (about $5 billion) and hybrids (about $6 billion) issuance during the first quarter of 2025. This was noticeably higher than the same period in 2024.
- However, when combined with senior long-term debt, total issuance to date has lagged recent years as companies appear to wait for clarity on global trade policies and any stabilizing effects for fixed income markets, while higher interest rates and volatile credit spreads are raising questions of more expensive borrowing costs for the year.
- S&P Global Ratings expects first-quarter issuance will buy some companies time until their next funding need but expects the industry will eventually require access to the capital markets at a reasonable price, as we do not foresee capital spending or dividend decreases.
- To the extent borrowing costs remain elevated--or first-quarter momentum of common equity and hybrids issuance stalls--we would expect financial performance to deteriorate.
Insurance
49. Solid Earnings Momentum For Global Multiline Insurers Continues, May 23, 2025
Marc-Philippe Juilliard, Paris, + 33 14 075 2510, m-philippe.juilliard@spglobal.com
- The 15 global multiline insurers (GMIs) that we rate reported aggregate net earnings of $68.1 billion in 2024. This constitutes an increase of 8% from 2023, or 15% excluding exceptional items.
- Property and casualty (P/C) activities benefited from strong underwriting results and volume growth. Even though combined ratios in personal lines improved, pricing adjustments take longer to materialize than in commercial lines.
- Life operation earnings increased materially. However, the anticipated market volatility in 2025 could significantly impair GMIs' short-term profitability.
- Dividend payout ratios over the past few years were high, at 50%-60%, and many players bought back shares for significant amounts.
- In our base-case scenario, we expect GMIs will report stable underwriting profits or a low single-digit increase in underwriting profits in 2025, compared with 2023-2024.
50. Italian Insurance Sector 2025: Sustained Revenue Growth And Resilient Profitability, May 21, 2025
Taos Fudji, Milan, + 390272111276 , taos.fudji@spglobal.com
- Unit-linked life policies continue to outpace traditional life savings policies, with an expected annual growth of 10% and 5%, respectively. We do not believe that current market uncertainties will reduce the attractiveness of life insurance.
- We expect lapse rates in the life sector will decline, with redemptions of life savings products decreasing below 8% in 2025.
- We forecast above-inflation premium growth for property/casualty (P/C) insurers due to improving underwriting performance and stable motor claims frequency.
- Non-motor insurance will increase by about 6% per year over 2024-2026 because of rising demand for health and property insurance. The mandatory natural catastrophe risk cover for corporates from October 2024 could lead to additional premium growth.
Leisure and lodging
51. Cracks In Consumer Confidence Amid Tariffs And Inflation Could Lead To Tighter U.S. Leisure Spending, May 22, 2025
Emile J Courtney, CFA, New York, 1-212-438-7824, emile.courtney@spglobal.com
- Despite the temporary pause and steep reduction on the highest tariff rates between China and the U.S. and the trade agreement with the U.K., sharply higher U.S. average effective tariffs on imported goods as well as the persistent unpredictability of policy have led us to lower our U.S. macroeconomic forecasts.
- Heightened macroeconomic uncertainty is likely to remain. Trade conflicts and market volatility may continue to weigh on consumer and business sentiment, and travel and entertainment spending decisions can be delayed or cancelled. This is already hurting hotel demand, particularly at the low end.
- The tariff impact on manufacturers may be more immediate, as discretionary spending on high-price leisure products such as boats, motorcycles, and powersports is already feeling the pressure from a strained consumer and high interest rates, and manufacturers will need to absorb higher costs.
- Several other leisure sectors including casinos, cruise, fitness, regional theme parks and live events will be sensitive to weakening consumer confidence. However, the impact of tariffs could be mitigated for some entertainment options if consumers choose to spend on value drive-to-entertainment options compared to expensive air travel and land-based vacations.
- Those ratings with sufficient cushion in credit measures will be able to withstand a temporary hit to earnings, and a majority of our ratings outlooks in the sector are stable. However, those issuers with limited cushion, or liquidity and refinancing needs, will face downward ratings pressure.
Leveraged finance
52. Market Insights: Sector Intelligence | Leveraged Finance: European Summary Report, May 22, 2025
Tia Zhang, London, +44-796-667-9379, tia.zhang2@spglobal.com
- As of March 31, 2025, European CLOs holdings of BSL rated 'B-' were worth a total of about €40.65 billion, or about 25.8% of CLO portfolios in Europe. The 30 largest 'B-' rated credits, based on their debt volume, make up 52% of the total principal of 'B-' rated European CLO holdings which is predominantly led by healthcare, leisure, and software sectors. Tariffs minimally affect the top 30 'B-' European CLO holdings directly, but these credits are vulnerable to secondary impacts like economic slowdowns, fiscal changes, and consumer confidence. Top 30 'B-' rated companies have taken measures like optimized operations and cost-cutting to maintain ratings, but their leveraged structures depend on revenue recovery in 2025.
- The 12-month trailing speculative-grade default rate (%) for Europe stands at 3.8%. European defaults increased to eight from just three in the previous quarter, and they make up over one-third of year-to-date global defaults. Most defaults originate from three sectors: health care, media and entertainment, and chemicals, packaging, and environmental services. Distressed exchanges remain the main cause of defaults.
- Europe's private credit market has grown significantly over the past decade in parallel with the rise of private equity - roughly totaling $400 billion. European private credit funds are gradually expanding their lending activities from midmarket entities to more credit classes and strengthening their relationships with banks. The European NBFI sector is smaller compared to the U.S., representing an average of 7.7% of total financial assets, compared with 16.3% in the U.S.
Media and telecom
53. Credit FAQ: How We Calculate Selected European Telcos' Leverage, May 27, 2025
Natalia Arrizabalaga, Stockholm, 33-1-4420-6662, Natalia.Arrizabalaga@spglobal.com
- S&P Global Ratings makes adjustments to telco’s reported debt balance which are standard practice in most corporate sectors. Among others, we assess the tax-affected unfunded portion of pension and other post-employment benefits, the netting of accessible cash and liquid investments, and reported lease liabilities.
- However, we also make less common debt adjustments, some of which are specific to the telecom sector. For example, we consider hybrid capital instruments, additional lease obligations, master service agreement liabilities, proportional consolidation, pro forma figures after a merger or acquisition, and spectrum-related future payment obligations.
54. Lights, Camera, Tariff Reaction: Our Updated Expectations For U.S. Media And Telecom Industries, May 21, 2025
Naveen Sarma, New York, 1-212-438-7833, naveen.sarma@spglobal.com
- We believe the domestic theme parks owned by Walt Disney Co. and Comcast Corp. would be hurt by an economic slowdown. These theme parks, especially the flagship parks in Orlando, Florida, are dependent on out-of-state visitors and could experience lower attendance and weaker per cap spending if the economy continues to weaken.
- We now believe the U.S. administration is likely to closely scrutinize large media, telecom, and tech M&A activity. Therefore, the prospects for material M&A in these sectors in 2025 are less likely.
- We believe the recent 25% auto tariff, which has already resulted in a tightening supply of imported autos, could decrease automotive sector advertising spending. The timing of this advertising pullback is unfortunate for advertisers and media companies as the TV industry moves into the TV upfront for the 2025-2026 broadcast season.
55. U.S. Film And Television Brief: Will 100% Tariffs On Movies Made Outside The U.S. Hurt Hollywood?, May 19, 2025
Naveen Sarma, New York, 1-212-438-7833, naveen.sarma@spglobal.com
- While unlikely to proceed at face value, S&P Global Ratings believes President Donald Trump's post on the social platform Truth Social calling for 100% tariffs on movies made outside the U.S. could lead to higher costs for the film industry and result in the release of fewer films.
- However, the president’s focus on the film and TV industry could lead to the consideration of other approaches to reinvigorate domestic film production. In our view, tax incentives would be more effective in helping the film industry than the proposed tariffs.
Metals and mining
56. S&P Global Ratings' Metal Price Assumptions: Coal Down, Gold Up, May 16, 2025
Simon Redmond, London, 44-20-7176-3683, simon.redmond@spglobal.com
- S&P Global Ratings has reviewed its metal and coal price assumptions in the context of global trade developments and updated economic forecasts.
- We have again revised upward our gold price assumptions and lowered our assumptions for metallurgical and thermal coal prices. Other price assumptions remained unchanged.
Oil and gas
57. U.S. Oil And Gas: Oil Price Drops Could Bore Into Producer Spending, May 22, 2025
Carin Dehne-Kiley, CFA, New York, 1-212-438-1092, carin.dehne-kiley@spglobal.com
- We expect U.S. oil and gas exploration and production (E&P) companies to reduce aggregate capital spending by 5%-10% this year amid global economic uncertainty and heightened oil price volatility, capital discipline, and ongoing efficiency gains.
- We believe U.S. oil-focused producers will likely cut spending more significantly if West Texas Intermediate (WTI) crude oil prices fall to the $50/bbl area for a sustained period.
- Despite the strength in natural gas prices and a potential uptick in natural gas drilling, we do not expect the increase in natural gas spending to offset the drop in oil-focused activity.
- We estimate full-year 2025 production to be minimally affected by the slowdown in activity, given strong volumes in the first quarter and ongoing capital efficiency gains, but would expect a more pronounced production response next year if the lower spending levels persist.
- Meanwhile, we expect Canadian producers increase spending by a low single digit percentage this year, primarily on longer-cycle oil sands projects, leading to modest production growth.
Public finance
58. Higher Education Brief: Muted Relief For Australian Universities Post Election, May 14, 2025, May 15, 2025
Martin J Foo, Melbourne, 61-3-9631-2016, martin.foo@spglobal.com
- Leaders of Australia's top universities will feel a sense of tempered relief.
- Following its re-election in May 2025, the Labor government plans to quickly reverse the sharp influx of foreign student numbers.
- This will dampen universities' revenue growth and consequently erode rating headroom. But the opposition's proposals would have been tougher.
59. China's LGFVs In Transition: Cutting Debt May Prove Easier Than Making Money, May 26, 2025
Christopher Yip, Hong Kong, 852-2533-3593, christopher.yip@spglobal.com
- China's LGFVs would need to nearly triple their EBITDA over three years just to bring leverage down to that of commercial state-owned enterprises.
- While some first movers have managed to strengthen their financial profiles, many of these development-oriented entities will struggle to balance business expansion with debt control.
- Investors may gradually become more discerning on fundamental credit risks for LGFVs as well as "former LGFVs." In the latter case, a new status may not come with meaningful changes to their credit profiles.
60. U.S. Brief: U.S. Supreme Court Split Decision On St. Isidore Supports Credit Stability For Charter Schools, May 27, 2025
Robert Tu, San Francisco, + 1 (415) 371 5087, robert.tu@spglobal.com
- On May 22, 2025, the U.S. Supreme Court issued a split decision effectively upholding a lower court ruling that blocked the establishment of a religious charter school in Oklahoma.
- In S&P Global Ratings' opinion, the outcome supports credit stability for the charter school sector by maintaining the long-standing funding framework under existing charter school laws. However, the lack of a definitive ruling means the decision could allow the court to possibly reconsider the issue in a future case.
61. Tariff Uncertainty Could Weigh On U.S. Public Power Utilities, May 22, 2025
David N Bodek, New York, + 1 (212) 438 7969, david.bodek@spglobal.com
- The U.S. power industry faces an acute supply backlog of critical grid components, such as foreign-manufactured transformers, and tariffs could increase the already elevated prices of the equipment and materials.
- S&P Global Ratings believes that whether credit quality will be negatively affected by tariffs will depend on their magnitude and duration and utilities' capacity to recover related costs from their customers.
- Our negative sector outlook does not mean that we contemplate lowering our ratings on a large swath of the public power utilities; rather, in the prevailing inflationary environment, public power utilities are more susceptible to weakening financial metrics and possible downgrades than they were historically.
Real estate
62. European Commercial Real Estate Companies Hardly Affected By Shifts In U.S. Trade Policy, May 20, 2025
Franck Delage, Paris, 33-14-420-6778, franck.delage@spglobal.com
- High real interest rates, volatile construction costs, and a potential increase in investors' risk aversion because of recent shifts in U.S. tariffs could slow the recovery in European real estate values.
- However, the current conditions hardly affect European real estate investment trusts' (REITs') access to financing, at least for now. Additionally, more capital could be allocated to European real estate, which is seen as a safe haven, compared with the U.S. Moreover, REITs' property yields have largely expanded over the past two years.
- Therefore, we continue to expect flat valuations over 2025-2026, unless interest rates were to increase significantly above the peak level from October 2023, without being offset by higher cash flows.
- We might reconsider our revenue growth assumptions if macroeconomic or global trade conditions deteriorated significantly. Albeit lower than over 2023-2024, our current revenue growth expectations are positive for all property segments, except for non-prime office.
63. Sector Review: Top Philippine Developers Pursue Growth Despite Industry Strains, May 22, 2025
Fiona Chen, Singapore, 65-6216-1085, fiona.chen@spglobal.com
- The top four Philippine developers will ramp up premium residential projects over the next one to two years to offset the slowdown in mass market.
- Capital expenditure (capex) has returned to pre-pandemic levels, but with a gradual shift in weight from residential projects toward investment properties and land acquisitions, reflecting a growth stance.
- Leverage remains higher than the pre-pandemic level; we do not expect material deleveraging over the next one to two years as the top four continue investing for growth.
- The top four developers are all subsidiaries of large, diversified groups and will benefit from broad funding access, including bank loans, bonds, capital recycling from REIT platforms and sizable recurring income.
Sovereigns
64. Abridged Supranationals Interim Edition 2025: Multilateral Lending Institutions Sector Updates, May 22, 2025
Alexis Smith-juvelis, Englewood, + 1 (212) 438 0639, alexis.smith-juvelis@spglobal.com
- MLI capital levels remain robust, enhanced by various optimizations, while ongoing policy priorities, such as private-sector mobilization, continue to expand.
- The U.S. administration affirmed a general commitment to MLIs, although select institutions could receive more capital support than others.
- Some MLIs may shift funding priorities beyond renewables to other forms of energy, while Europe-focused institutions will allocate a small share of lending toward defense.
65. CreditWeek: How Will The Second-Order Effects Of Tariffs Affect Sovereigns?, May 23, 2025
Riccardo Bellesia, Milan, +39 272111229, riccardo.bellesia@spglobal.com
- S&P Global Ratings expects most sovereigns to endure the initial effects of tariffs, but the U.S.'s announced import duties will not affect all sovereigns equally.
- Those with solid external buffers, diversified economies, and limited merchandise exposure to the U.S. will likely be able to withstand immediate adverse credit implications. The secondary effects on most open, manufacturing-oriented economies—combined with lowered growth prospects and heightened uncertainty—could pose risks to countries entering this period of stress with weak fiscal and external positions.
Structured finance
66. Scenario Analysis: Why China ABS And RMBS Ratings Could Be Resilient To Tariff Risks, May 28, 2025
Yalan Tao, Hong Kong, 852-2532-8033, yalan.tao@spglobal.com
- The findings of two scenario analyses indicate ABS and RMBS in China that we rate should be resilient to tariff risk.
- Favorable features in the transactions that we rate lead to growing credit enhancement over time, strengthening rating stability.
67. EMEA Structured Finance Chart Book: May 2025, May 23, 2025
Andrew South, London, + 44 20 7176 3712, andrew.south@spglobal.com
- Investor-placed securitization issuance in April 2025 was €8.3 billion, down 40% on the volume in April 2024. Both CLO and RMBS sectors saw a significant issuance decline, likely due to difficult market conditions.
- In April 2025, we raised our ratings on 15 European securitization tranches in RMBS transactions across Ireland, Portugal, Spain, and the U.K. There were no downgrades.
68. Tariff Effects On European Structured Finance Are Limited, May 23, 2025
Andrew South, London, + 44 20 7176 3712, andrew.south@spglobal.com
- European structured finance issuance has held up well during a period of financial market volatility, which was prompted by the U.S. administration's announcements on import tariffs and trading partners' reactions.
- Global trade shifts could have some direct effects on corporate-backed structured finance sectors, such as collateralized loan obligations (CLOs) and commercial mortgage-backed securities (CMBS), although these are likely to be idiosyncratic and limited in scale.
- The more negative macroeconomic backdrop could also cause indirect tariff effects that would be more widespread across European structured finance.
- Despite these downside risks, the overall ratings performance of the European structured finance sector is set to remain stable.
69. U.S. Structured Finance Chart Book: May 2025, May 23, 2025
Stephen A Anderberg, New York, + (212) 438-8991, stephen.anderberg@spglobal.com
- Although non-qualified (non-QM) and debt service coverage ratio (DSCR) loan impairments have been increasing, many such loans continue to have cash flow. Moreover, strong home equity and a buoyed housing market have kept losses low.
- About 22% of our speculative-grade issuer ratings (by issuer count) are rated ‘B-’. The proportion has declined 500 basis points from its peak at 28% in mid-2021.
- Despite low unemployment levels, certain prime auto loan asset-backed securities (ABS) issuers are reporting higher-than-expected cumulative net losses on their pools. We believe that some of the deterioration is due to the increasing proportion of pooled loans for which obligors have a payment-to-income ratio greater than 10%.
70. Pre-Tariff U.S. Middle-Market Collateralized Loan Obligation Rally Is Unlikely To Last, May 22, 2025
Stephen A Anderberg, New York, + (212) 438-8991, stephen.anderberg@spglobal.com
- The U.S. middle market collateralized loan obligation market saw strength across all broad credit metric trends in first-quarter 2025, buoyed by active issuance and rising demand for private credit.
- Selective and conventional defaults slowed amid improved market conditions.
- Rating performance remained resilient through the first quarter, with downgrades slowing to the lowest level since 2023.
- Tariff-driven turmoil rocked credit markets globally. While first-order impacts appear limited, second-order effects could weigh more heavily on the middle market.
Webinars:
We regularly host webinars to provide current data, perspectives, and analysis on the sectors, events, and trends that shape the global market. To register for the upcoming webinars, please click here.
The Ratings View:
We published the latest "The Ratings View", which spotlights key developments and asset class trends on a weekly basis, on May 28.
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 May 26.
| Primary Contact: | Yucheng Zheng, New York 1-212-438-4436; yucheng.zheng@spglobal.com |
| Secondary Contacts: | David C Tesher, New York 212-438-2618; david.tesher@spglobal.com |
| Joe M Maguire, New York 1-212-438-7507; joe.maguire@spglobal.com | |
| Eunice Tan, Singapore 65-6530-6418; eunice.tan@spglobal.com | |
| Jose M Perez-Gorozpe, Madrid 34-914233212; jose.perez-gorozpe@spglobal.com | |
| Paul Watters, CFA, London 44-20-7176-3542; paul.watters@spglobal.com | |
| Research Contributor: | Sourabh G Kulkarni, CRISIL Global Analytical Center, an S&P Global Ratings affiliate, Pune ; |
No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.