Global credit quality continues to erode. S&P Global Ratings noted that economic resilience has somewhat limited the pace of downgrades so far this year, but slowing economic growth, sticky inflation, and tighter financing conditions are expected to weigh on credit, as reflected in a net negative outlook bias of close to 15%. Credits in consumer goods, retail, media, real estate, and more generally at the lower end of the ratings scale are most at risk. Our base-case scenario assumes default rates double this year to more than 4% in the U.S. and to 3.25% in Europe.