Most of the companies in S&P Global Ratings' infrastructure portfolio, including those in the energy, transport, and digital sectors, are not involved in export or import activities. Instead, contracts, regulatory frameworks, or quasi-monopolistic positions typically support revenues--albeit economic conditions can be influential.

We expect core infrastructure, which is typically regulated or contracted, to remain mostly resilient to tariffs. In contrast, core-plus infrastructure, which is usually only partially contracted, could be impacted. Value-add infrastructure, typically uncontracted and not regulated, could be more exposed to a material deterioration in market conditions depending on its competitive position.

Each company's rating headroom reflects the specific combination of the resilience and strength of its business model, along with its leverage and financial stability. We expect companies will protect their credit metrics if the current situation worsens their credit position. This will involve them maintaining healthy liquidity, which we view as essential for navigating market volatility. While it is still too soon to quantify the direct or indirect effects of the tariffs, this article outlines our early thoughts.

What We're Focusing On In Our Ratings Analysis

Large upcoming refinancings

We analyze companies' capacity to undertake such refinancings, along with market availability and our expectations regarding the cost of debt. In periods of turmoil, market access may be restricted, reinforcing the importance of companies refinancing their liabilities well in advance.

Weaker liquidity

Some companies may not have sufficient protection against unexpected market developments. We expect these companies would adopt a prudent financial policy and support their liquidity with either cash on hand or committed credit lines. In the current context, credit lines may be more expensive, preventing some companies from reestablishing them in full.

Negative free operating cash flow

Companies in this position may rely on ongoing financing or equity injections. The situation could be temporary, for example due to an expansion. If it is structural, changes in market conditions, such as higher borrowing costs or lenders' lower risk appetites, could have material repercussions for companies' capacity to attract the funding they require.

Higher borrowing costs and floating interest rates

In a volatile environment, higher yields and risk premiums may lead to higher financial expenses. Though European Central Bank interest rates may fall further during 2025, we expect them to start to increase again in late 2026. In addition, the higher premiums required by investors could lead to higher borrowing costs for new issuances as soon as this year. Our early January estimate indicated that European borrowers with cheap 'BBB' or 'BB' fixed rate bonds could face a funding cost rise of about 170-195 basis points for maturities in 2025 and 2026 if refinanced at current new-issue yields. The possibility of this is likely to have increased given recent increases in spreads and yields.

Foreign-exchange risk

Companies exposed to foreign-exchange risk may see more volatility in their financials and depreciation of the dividends they upstream in hard currency to their parent companies.

Growth assumptions

Ratings that depend on material growth assumptions could be at risk in the current context. For example, airports or roads that rely on substantial growth in air passenger traffic may face rating changes or outlook revisions in the event of lower growth assumptions.

Government support

Since infrastructure is a strategically important sector that receives government support, changes in the amount of support can have material ratings implications.

Budgetary constraints

Affordability and budgetary constraints pose risks to power grids and railways, especially as a varying mix of consumer tariffs and taxes must compensate for sharply increasing regulatory asset bases.

Offshore Wind Farm Operators Are The Most Exposed

Tariff uncertainty is driving liquid natural gas (LNG) prices down by reducing global industrial demand and dampening market sentiment. Lower LNG prices depress European power prices, and our assumption of $14 per million British thermal units for the rest of 2025 (see "S&P Global Ratings Lowers Its Oil Price Assumptions On Potential Oversupply; Natural Gas Price Assumptions Unchanged," April 10, 2025) is at increasing risk. At the same time, lower LNG prices may facilitate the EU's push to fill gas storage to 90% of capacity by Nov. 1, 2025 (if this target is kept) and thereby reduce LNG price volatility.

Lower global economic growth and higher risk-free rates than we expected at the start of the year are weighing on the most capital expenditure (capex)-intensive segments, notably power grids and nuclear and offshore wind generators.

Some European power and gas utilities have U.S. operations, but there are mitigants to this direct exposure. In the cases of Iberdrola S.A. and National Grid PLC, the power and gas grids in the U.S. are the responsibility of the states rather than the federal government. The EBITDA contribution from the large onshore U.S. renewable power operations of Electricite de France S.A., Engie S.A., and Iberdrola is low relative to these companies' global EBITDA bases, which exceed €14 billion each per year.

Beyond trade tariffs, European offshore wind farm players operating in the U.S. are the most exposed to the new administration's energy policies, especially those that operate large single projects. Weak sector economics had already raised credit risks before the new administration took office. Then, on April 16, 2025, the government ordered a halt to the construction of Equinor's Empire Wind project (which carries $3 billion project debt financing), showing how vulnerable the sector is to federal interventions. Although uncertainties as to the ongoing economics and viability of offshore wind projects have increased, given significant cost escalations, we view the Empire Wind intervention as a one-off event and therefore not part of our base-case scenario. We believe that Orsted A/S and EDP, S.A. are the most exposed to changes in energy policies, yet this appears manageable for now at the current rating levels.

The main channel of exposure is potential changes in investment tax and production tax credits (part of the Inflation Reduction Act), which the U.S. government provides to utilities, including those in Europe, to promote investment in renewable energy projects. European utilities rely on these tax credits to fund their renewable projects, but we expect them to find it harder to obtain as many credits for new projects as they did previously, if they can obtain any at all. That said, reduced project activity could improve otherwise negative discretionary cash flows.

We're Monitoring Mobility Patterns And Usage Underpinning Transportation Infrastructure

We expect our rated transportation infrastructure portfolio will resist market turmoil, although it won't be immune to it. Contractual or regulatory frameworks support most of the portfolio. However, revenue generation ultimately relies on traffic volumes and mobility patterns. In weaker economies, end users may travel less or opt to take shorter, less expensive trips. Additionally, cargo movements could decline as economic activity weakens demand and consumption.

We are shifting toward an environment characterized by lower demand growth and higher borrowing costs, but we believe that transportation infrastructure companies can mitigate these challenges. They can, and do, pass inflation on to customers through tariffs, which helps protect their operating margins. However, if inflation rises more than we expect this could render services less affordable, leading to lower discretionary spending and consumption.

We anticipate that infrastructure companies will evaluate expansion projects more carefully--particularly those at airports and ports--amid lower growth assumptions, higher borrowing costs, and supply-chain disruptions. Higher inflation may further strain capex budgets.

Seaports

Seaports handle a significant portion of global trade, making them vulnerable to fluctuations in trade patterns and volumes, either through revisions to trade policies or economic disruptions. Given our portfolio's limited direct exposure to the U.S., and the current growth prospects in Europe, we do not anticipate an even reduction in trade volumes at our rated European ports through 2025; however, we are monitoring this closely. Some European ports reported weaker volumes than anticipated in the first quarter of 2025 compared to the same period in 2024. Factors such as port congestion due to rerouted ships and adverse weather conditions may have contributed to this decline. The World Trade Organization now projects 0.5% growth in trade volumes in Europe for 2025.

Rated landlord seaports derive most of their revenues from lease agreements with mechanisms that bring revenue stability. For seaports that operate terminals, diversification and long-term contractual agreements enable them to effectively manage temporary setbacks in operating performance.

Although our rated seaports undertake substantial capex and dividend distributions, they likely have the flexibility to adjust these to preserve operating cash flows and compensate for uncertain trade throughput. That said, those seaports serving smaller markets or relying on a few commodities, industries, or logistical services might experience significant volume swings and see their rating buffers erode faster.

Airports

Our rated airports are primarily international and operate under regulatory frameworks. Performance was strong in 2024, and we saw solid prospects for air transport at the beginning of 2025. While we do not have confirmation that air passenger traffic is slowing in Europe, we now expect more modest or lower growth than we previously projected due to weaker economic forecasts. This is not a direct consequence of the tariffs. Rather, it is primarily related to the broader implications of the tariffs on the economy and the potential changes in consumer preferences for flying to and from the U.S.

Under our base case, we anticipate low-single-digit or even flat air traffic growth in 2025 and 2026, depending on the asset. We already see signs that inbound air travel bookings to the U.S. are down overall (see "Credit Trends: Global Airlines Brace For Tariff Uncertainty," published on April 22, 2025).

Airports that serve as hubs or handle long-haul traffic may see a decline in traffic to and from the U.S. Additionally, softer macroeconomic conditions in certain European countries could erode the catchment areas of some airports, reducing inbound traffic to key leisure destinations. While many airports have planned to support traffic growth by using new larger aircraft, it remains uncertain whether tariffs and trade barriers could affect the supply of such aircraft.

Airports in our portfolio generally have the capacity to pass tariff increases on to airlines through aeronautical charges. However, regulatory periods may temporarily delay pass-throughs, putting pressure on airports' credit metrics until they can increase the charges in full. Moreover, some U.K. airports that have debt linked to the Retail Price Index will be exposed to macroeconomic volatility.

Although rated airports have some capex and dividends flexibility, many have only just started to catch up with investments and shareholder distributions after pandemic-related hiatuses. This has already constrained their flexibility. Positive momentum in our airport ratings is therefore increasingly remote.

Toll roads

Concessional agreements support our rated toll road operators' competitive positions but expose them to traffic risk. Road traffic typically correlates with economic performance, particularly heavy traffic. In Europe, heavy traffic accounts for 10%-15% of total traffic but contributes 25%-30% of toll road operators' revenues due to higher tariffs.

Toll roads that face competition from free alternative roads become more vulnerable during times of economic stress. For now, we do not see a risk of subdued traffic volume growth in our European portfolio, but we have lowered our growth expectations. The outcome will eventually depend on the length and severity of the impact on economic growth in their catchment areas. Although concessional agreements generally permit tariff adjustments for inflation, we continue to monitor the affordability of these adjustments and the political sensitivities surrounding them.

Railways

Our railway portfolio primarily consists of national incumbents that are typically government-owned. While usage is less of a concern given that governments generally subsidize regional services, railways' ability to pass through inflation in 2023 and 2024 was weaker than for other infrastructure assets. This was largely due to users' sensitivity to increases in charges.

Most of our rated portfolio is undertaking significant railway network expansions or improvements on the back of government programs aimed at decarbonizing transportation by shifting passengers and freight from roads to railways. However, inflation could push expansion budgets even higher, complicating project execution and reducing these investments' value for money.

Digital Infrastructure Operators Face Macroeconomic Changes To Supply And Demand

Digital infrastructure consists of passive physical assets like telecom towers, wholesale fiber networks, and data centers that largely serve domestic end-users with limited cross-border delivery or dependence on physical trade. We therefore do not expect U.S. tariffs to have a material direct impact on European digital infrastructure companies. However, the macroeconomic consequences of trade disruptions can indirectly affect their supply and demand dynamics.

The main transmission channel would be depressed macroeconomic conditions, in our view. While we expect most digital infrastructure companies will be able to pass on higher inflation costs through price indexation, higher interest rate costs would add pressure to infrastructure companies that rely on growth via uncontracted revenues, and that are highly leveraged with weak or negative free cash flows. In addition, weaker macroeconomic conditions could reduce customer demand for premium products.

Wholesale fiber

Higher unemployment and lower discretionary spending could weaken demand for high-speed fiber connectivity, resulting in the slower take-up and penetration of wholesale fiber networks. However, we would not expect to see declines in existing fiber demand once customers have migrated from other technologies, partly due to the ongoing decommissioning of copper in many markets.

Highly leveraged fiber companies with material development and commercial risk face the greatest challenges. For such companies, financial sustainability may depend on growth in lines leased to retail ISPs, but they can face competition from other wholesale providers that have overbuilt their networks. Not only could weak macroeconomic conditions weigh on demand and retail end-user take-up, but higher interest rates could also pressure positive free cash flow generation.

Data centers

Demand for data centers has been skyrocketing and in our base case we do not expect any sudden drop off. However, recessionary conditions could affect the data center segment in several ways. Most specifically, a material increase in clients' active equipment costs could affect their return-on-investment (ROI) decisions and reduce data center demand.

For example, higher server costs due to tariffs on microprocessors could increase the ROI hurdle for a cloud provider and erode demand for new data center space. End-user demand from business-to-business cloud customers might also fall due to weaker operating budgets in an economic downturn.

Telecom towers

We believe that telecom tower companies are reasonably insulated from macroeconomic effects because of their long-term offtake contracts. However, in theory, they could see negative effects if weaker operating conditions for consumer-facing mobile network operators (MNOs) result in a scaledown of network densification needs and build-to-suit programs.

Higher active equipment costs due to tariffs on telecom equipment like antennae and baseband units could also reduce MNOs' demand for additional tower space. However, because Ericsson (Telefonaktiebolaget L.M.) and Nokia Corp. are the two main suppliers of European telecom equipment in Europe, we believe European telcos should be less exposed than other non-European telco peers.

Local investment in capacity

Tariff disruptions could also lead governments to reassess the strategic risk of reliance on critical infrastructure providers outside their national or regional borders, and in turn prioritize domestic digital infrastructure capacity. In this case, the EU and its member states could recalibrate competition regulation in the hope that better profitability prospects will spur investment. They could also simply increase their requirements for onshoring critical digital infrastructure.

We have already seen some examples of the first tactic in Europe pre-dating the current tariff announcements. In the past two years, national and EU competition authorities have approved MNO consolidation, extended spectrum licenses, and implemented lighter-touch wholesale fixed-broadband regulation. If the tariff debate spurs a further shift in support of local capacity, the impacts on digital infrastructure companies may vary.

In the event of widespread, structural MNO consolidation, there could be long-term declines in tower demand because of there being fewer wholesale customers. Conversely, a requirement to onshore critical infrastructure could be positive for data centers. For example, data sovereignty concerns could require cloud or AI inference data centers to be built in local jurisdictions.

Editors: Julie Dillon and Emily Williamson

Related Research

• Credit Trends: Global Airlines Brace For Tariff Uncertainty, April 22, 2025
• Most European Corporates Can Manage The Immediate Effects Of U.S. Tariffs, April 4, 2025
• Credit Conditions Europe Q2 2025: Europe Plots A New Course, March 26, 2025
• Economic Outlook Eurozone Q2 2025: A World In Limbo, March 25, 2025
• Economic Outlook Emerging Markets Q2 2025: Trade Policy Unknowns Dampen Investment, March 25, 2025
• Economic Outlook U.S. Q2 2025: Losing Steam Amid Shifting Policies, March 25, 2025
• U.K. Economic Outlook Q2 2025: Recovery In Consumption Slows As Inflationary Pressure Returns, March 25, 2025

External Research

• World Trade Organization Global Trade Outlook and Statistics, April 2025