BLOG — June 02, 2025
Modernizing Credit Risk Management Powered by AI and Data: A Case Study on Tariff Impacts in the Auto Industry
Background
In today’s fast-changing financial and trade landscape, organizations are increasingly turning to Artificial Intelligence (AI) and automation to strengthen their credit risk strategies. A key theme at the 2025 S&P Global Market Intelligence (SPGMI) APAC Roadshow was the impact of global trade tariffs, especially on sectors like automotive, and how AI-powered insights enable faster, more informed actions.
Auto Sector Headwinds Underscore the Need for Smarter Credit Workflows
As per S&P Global Ratings research, cloudy skies loom over the auto industry – driven by market share losses in China, tariff concerns, and restructuring pressure on suppliers. [1]
In this volatile environment, businesses must act swiftly. Traditional methods often fall short, and across our global client engagements, AI is already helping streamline routine credit tasks – especially in monitoring, risk modeling, and sentiment analysis – enabling smarter, faster decisions.
I. Unlock Macro-to-Entity Insights with Semantic Search and GenAI-Powered CreditCompanion™ on RatingsDirect®, and Track Sector-Level Credit Tone Using Sentiment on Machine-Readable Research
Advancements in technology are transforming how quickly we can extract actionable business intelligence – especially when navigating complex challenges like tariffs.
- Semantic Search helps users quickly find relevant insights. A search like 'Auto tariff Asia' surfaces content from across S&P Global – including RatingsDirect®.
Figure 1: Semantic searches identify relevant content across S&P Global Market Intelligence from S&P Capital IQ Pro® platform
Source: RatingsDirect® on S&P Capital IQ Pro, S&P Global Market Intelligence. As of May 2025. For illustration only.
- CreditCompanionTM – currently in beta on RatingsDirect®via the S&P Capital IQ Pro platform – is a GenAI application that guides users in credit workflows on countries, sectors, and entities. It uses a Retrieval-Augmented Generation (RAG) model to surface relevant excerpts covered by S&P Global Ratings analysts.
For example, users looking to summarize the impact of tariffs on the auto industry might ask,
“What is the impact of trade tariffs on the automobiles industry in Asia?” and then drill down further with, “What is the impact of trade tariffs on @<insert entity name>?” (Figure 2a and Figure 2b for sample responses).
Figure 2a: Prompt on Tariff Impact: Industry-Level
Source: CreditCompanionTM (Beta release) on RatingsDirect® on S&P Capital IQ Pro, S&P Global Market Intelligence. As of May 2025. For illustration only. CreditCompanionTM is powered by generative AI technology, which may produce inaccurate responses. Please review the Legal Disclaimer for more information. Entity names have been blurred in the figure.
Figure 2b: Prompt on Tariff Impact: Entity-Level
Source: CreditCompanionTM (Beta release) on RatingsDirect® on S&P Capital IQ Pro, S&P Global Market Intelligence. As of May 2025. For illustration only. CreditCompanionTM is powered by generative AI technology, which may produce inaccurate responses. Please review the Legal Disclaimer for more information. Entity names have been blurred in the figure.
- Users with S&P Capital IQ Pro subscription can also leverage GenAI tool ChatIQ to complement insights from CreditCompanionTM. For example, if CreditCompanionTM identifies a decline in earnings or cash flows as a potential driver of a credit rating change (“What can cause a credit ratings downgrade for @<insert entity name>”), users can simultaneously use ChatIQ to gather management actions, “Provide an overview of <insert entity name> management plans to improve profitability and growth.” (Figure 3).
Figure 3: CreditCompanionTM highlights potential rating downgrade drivers (left), while ChatIQ provides insights on management’s plans to improve profitability and growth (right)
Source: CreditCompanionTM (Beta release) on RatingsDirect® and ChatIQ, both on S&P Capital IQ Pro, S&P Global Market Intelligence. As of May 2025. For illustration only. CreditCompanionTM and ChatIQ are powered by generative AI technology, which may produce inaccurate responses. Please review the Legal Disclaimer for more information. Entity names have been blurred in the figure.
- Machine-readable ratings research can be used with users’ chosen sentiment models to scan industry commentaries published over a period and rank industries by the analyst tone (positive or negative) in these reports. For example, the consumer industry was consistently ranked as the most negative from the announcement of reciprocal tariffs in March 2025 through May 2025.
Figure 4: Text sentiment of commentary reports published on RatingsDirect® on S&P Capital IQ Pro from March to May 2025, bucketed by industries (consumer related industries marked in red)
Source: In this illustration, we utilized an open-source lexicon (AFINN) to map words in industry-level commentary articles to a positive/negative score ranging from -5 to +5, aggregating these scores from March to May, 2025. This machine-readable research is derived from RatingsXpress®: Research from S&P Global Market Intelligence. The lexicon for Text Sentiment Scores is sourced from http://www2.imm.dtu.dk/pubdb/pubs/6010-full.html . As of May 2025. For illustration purposes only.
II. Stay Ahead of Credit Risk with Data-Powered Surveillance via Credit Monitor on RatingsDirect® on S&P Capital IQ Pro
Credit Monitor streamlines credit risk tracking by consolidating ratings data and research, market indicators, and news into one customizable hub.
The Overview page is a portfolio and sector/industry level dashboard. For example, you can drill down into companies on the Automobiles & Components sector with positive or negative Outlook.
Figure 5: Negative Outlook Skew in Auto Sector Signals Early Stress Amid Tariff Talks
Source: Credit Monitor, RatingsDirect® on S&P Capital IQ Pro, S&P Global Market Intelligence. As of May 2025. For illustration only. Entity names have been blurred in the figure.
- The Latest Updates section consolidates recent research and rating actions, with filters and alerts.
Figure 6: Latest Updates Saves Time by Consolidating Research and Rating Actions
Source: Credit Monitor, RatingsDirect® on S&P Capital IQ Pro, S&P Global Market Intelligence. As of May 2025. For illustration only. Entity names have been blurred in the figure.
Users can then drill down to spot early signals of potential credit rating changes at the individual entity level from the Entity Overview page.
- From the Ratings section, users can access credit ratings and market-driven signals like CDS and equity-implied PD. For example, a CDS signal more than one notch below the rating may flag downgrade risk. With required entitlements, one can also access information from other credit ratings agencies.
Figure 7: Market Signals Highlight Potential Credit Downgrade Risks for an Entity
Source: Credit Monitor, RatingsDirect® on S&P Capital IQ Pro, S&P Global Market Intelligence. As of May 2025. For illustration only. Entity names have been blurred in the figure.
- Users can conveniently benchmark entities vs. its global industries within the Fundamentals section. The credit adjusted ratios are enhanced with color-coded quartiles, saving the need to separately download entities and peer groups for comparisons.
Figure 8: Peer Benchmarking Reveals Cash Flow Weakness in the Same Entity
Source: Credit Monitor, RatingsDirect® on S&P Capital IQ Pro, S&P Global Market Intelligence. As of May 2025. For illustration only. Entity names have been blurred in the figure.
- Next, for the same entity, users can refer to AI-extracted Outlook Financial Thresholds – sourced from research articles – to spot potential rating action triggers. For instance, if cash flows remain significantly negative, the analyst flags a downside scenario. This saves users time otherwise spent manually extracting such insights.
Figure 9: Analyst-Sourced Financial Thresholds Flag Downside Risk from Sustained Negative Cash Flows
Source: Credit Monitor, RatingsDirect® on S&P Capital IQ Pro, S&P Global Market Intelligence. As of May 2025. For illustration only. Entity names have been blurred in the figure.
- Users may want to track how well the entity’s management is executing on improving earnings growth. Earnings calls, transcripts, key developments, and brokerage research are consolidated in one place (with S&P Capital IQ Pro access) on the Credit Monitor Overview page, with alert features.
III. Other related capabilities
- AI-Ready Insights Signal Credit Risk Ahead of Time: Business and financial risk profiles from S&P Global Ratings’ Scores & Factors, along with NLP-based sentiment signals from machine-readable research, can serve as early indicators of rating changes, in addition to CreditWatch and Outlook. A detailed article[2] is available on S&P Global’s website.
- AI-ready data can accelerate credit memo creation – reducing manual effort of integrating multiple datasets and enabling firms to perform scalable, consistent credit assessments. A detailed Credit Memo Automation Case Study[3] is available on S&P Global’s website.
[1] Industry Credit Outlook: Autos, from RatingsDirect® on S&P Capital IQ Pro, S&P Global Market Intelligence. As of January 2025. For illustration only.
[2] Revolutionizing Credit Surveillance: Part One on S&P Global Market Intelligence Website
[3] Credit Memo Automation Case Study on S&P Global Market Intelligence Website
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