The credit outlook is unraveling as recession risks mount. Higher interest rates, soaring costs, slumping confidence, financial market volatility, and cost of living pressures are likely to take their toll. These are likely to start to show up in second-quarter results. Even so, the corporate sector enters this downturn relatively well prepared. Pandemic stimulus bolstered cash balances and locked in cheap financing, helping explain the gap between weakening sentiment and resilient credit trends. Our stress scenarios suggest a mild or short recession could be easily weathered. A more severe recession would stretch financial metrics beyond pandemic levels and pressure ratings further. A gas supply shock as winter approaches could be particularly difficult for the most exposed sectors.