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What We’re Watching

New risks are emerging, and established risks are evolving—all of which require a new playbook for issuers and investors in the debt markets.

Key Themes

S&P Global Ratings expects additional credit deterioration in 2024, largely at the lower end of the ratings scale. An environment of increasingly rapid change requires financial market participants to adapt their playbooks.

Looking ahead at 2024 and beyond, we are closely watching how credit headwinds, capital flows, geopolitical uncertainty, energy and climate resilience, and crypto, cyber, and tech disruption transform the global economy and financial markets over what promises to be yet another challenging period.

Geopolitical Uncertainty

Geopolitical risks have returned to center stage, with the war between Israel and Hamas, the prolonged Russia-Ukraine conflict, and ongoing U.S.-China tensions. This increased geopolitical fragmentation affects corporates and governments in their strategies for supply chain and energy security, with potential broader implications on food prices, global trade, and inflation—while increasing the potential for event risk.


Credit Headwinds

We are back to an environment of higher real interest rates, concluding an era of cheap money that started in the wake of the Great Financial Crisis. Borrowers across all asset classes will need to adjust to tighter financing conditions and softer economic growth. With a durably higher cost of debt, a ramp-up in maturities, and slowing economic activity in the cards for 2024, the focus comes back to credit fundamentals and liquidity analysis.


Capital Flows

With the era of easy money over, investors are rebalancing their portfolios to adjust for shifting risks and returns. Borrowers (especially those at the lower end of the ratings ladder facing tighter access to credit) will need to adapt to the reshuffling of capital flows from long-duration speculative assets to safer havens—as well as adapt to the knock-on implications for overall market liquidity, foreign exchange reserves, and investment in emerging markets.


Energy and Climate Resilience

New challenges are also emerging from the necessity to accelerate the world’s transition to a low-carbon economy to limit the potential dramatic consequences of climate change. Extreme weather conditions and worsening physical risks continue to increase and influence credit fundamentals. However, we believe companies' and governments' readiness to address these risks, in large part, remains low and could become even more challenging to overcome in an environment of slower growth and tighter financing conditions.


Crypto, Cyber, & Tech Disruption

The transformation of global and regional financial systems amid the adoption of new technologies—from generative artificial intelligence to blockchain and beyond—is accelerating an era of growth and discovery while also heightening single-entity and systemic cyber risk, forcing corporate and government entities to adapt their playbooks.