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In This List

Instant Insights: Key Takeaways From Our Research


Saudi Arabia's Vision 2030: Some Likely Winners


China's Property Lifeline Won't Stretch To All


Russia-Ukraine Military Conflict: Key Takeaways From Our Articles


What Inflation And Higher Yields Mean For Infrastructure, Project Finance, And Utilities: Key Takeaways From Our Reports

Instant Insights: Key Takeaways From Our Research

(Editor's Note: This research roundup features a curated compilation of the key takeaways from our most up-to-date thought leadership. This edition has been updated from the last roundup on Nov. 23, 2022.)

This week, our key takeaways from recent articles include the following: Our first-quarter 2023 global economic outlook along with regional forecasts for Asia-Pacific, Canada, emerging markets, EMEA emerging markets, the eurozone, Latin America, the U.K. and the U.S., and 2023 outlook for local and regional governments. We dive into local governments, infrastructure REITs and toll roads in China, European railways, European auto ABS, Saudi corporate investments, North American transportation infrastructure and power and utilities, buy-to-let RMBS, public finance, and nonbank financial firms in the U.K., the excess savings, higher education, cultural institutions, the veterinary industry, and medtech companies in the U.S. We also feature North America's risky credits, the 'BBB' pulse, and credit implications of hybrid noncall decisions. Regarding the Russia-Ukraine conflict, please see our macroeconomic and credit updates here: Russia-Ukraine Macro, Market, & Credit Risks.

S&P Global Ratings periodically updates this article, which contains an edited compilation of key takeaways from our most up-to-date thought leadership organized by sector, region/country, and publication date (see table 1).

Table 1

Instant Insights Article Series
Sector Region/country No. Article title Publication date
Autos China 1 China Auto: The Speedometer Is Slowing 10/19/2022
Autos Europe 2 Energy Rationing Could Hit The Brakes On European Auto Production 9/30/2022
Autos Global 3 Auto Sales Recovery Stalls Amid Weaker Economic Outlook 10/14/2022
Building material contractors and mortgage servicers U.S. 4 How U.S. Building Material Contractors And Mortgage Servicers Are Navigating Market Volatility 10/20/2022
Business services Global 5 Rating Pressure Intensifies On Global Business And Technology Services As Recession Looms 10/25/2022
Chemicals Global 6 Chemical Companies Face Increasing Cyber Risk On The Road To Digitization 10/31/2022
Chemicals Global 7 Stressing Accessibility, Affordability, and Availability: Can GCC Chemical Companies Stand The Heat? 10/10/2022
Chemicals Global 8 Chemical Sector Outlook: Petrochemical Companies Should Have The Cushion To Withstand Some EBITDA Deterioration 10/7/2022
Corporates China 9 China's SOEs Are Stuck In A Debt Trap 9/20/2022
Corporates Italy 10 Italian Corporate Outlook 2023: High Energy Costs May Constrain Competitiveness 11/15/2022
Corporates Saudi Arab 11 Saudi Capital Markets Will Be Key To Powering Corporate Investments 11/29/2022
Corporates U.K. 12 Corporate Defined Benefit Pension Schemes: U.K. Liquidity Crisis Masks A Positive Global Trend Thanks To Higher Discount Rates 11/14/2022
Corporates U.K. 13 U.K. Nonfinancial Corporates: Riding The Rollercoaster 10/14/2022
Corporates U.S. 14 Accounting Hot Topics On The Horizon And Their Credit Metric Relevance 11/15/2022
Credit trends and market liquidity Global 15 BBB' Pulse: Fallen Angel Trend Resists Pressures 11/24/2022
Credit trends and market liquidity Global 16 Weakest Links Rise, Signaling Defaults Ahead 11/15/2022
Credit trends and market liquidity Global 17 Europe And Emerging Markets Are Default Hotspots 11/11/2022
Credit trends and market liquidity Global 18 Inflationary Pressures Influenced Half Of Potential Downgrades In September 11/9/2022
Credit trends and market liquidity Global 19 Global Financing Conditions: Bond Issuance Set To Remain Weak Through Year-End, Expand Modestly In 2023 10/26/2022
Credit trends and market liquidity Global 20 Global Credit Markets Update Q4 2022: Running Up That Hill 10/11/2022
Credit trends and market liquidity Global 21 2021 Annual International Public Finance Default And Rating Transition Study 10/4/2022
Credit trends and market liquidity Emerging Markets 22 Risky Credits: In Emerging Markets, Downward Rating Transitions Prevail 11/22/2022
Credit trends and market liquidity Emerging Markets 23 2021 Annual Emerging And Frontier Markets Corporate Default And Rating Transition Study 11/4/2022
Credit trends and market liquidity Europe 24 The European Speculative-Grade Corporate Default Rate Could Rise To 3.25% By September 2023 As Downside Risks Rise 11/17/2022
Credit trends and market liquidity Europe 25 Risky Credits: The Respite In Europe May Be Short-Lived 11/3/2022
Credit trends and market liquidity North America 26 Risky Credits: North America's 'CCC+' And Below Rated Debt Reaches $230 Billion 11/24/2022
Credit trends and market liquidity U.S. 27 The U.S. Speculative-Grade Corporate Default Rate Could Reach 3.75% By September 2023 11/21/2022
Credit trends and market liquidity U.S. 28 The U.S. Distress Ratio Jumps Back Above Its Five-Year Average 11/4/2022
Cross-sector Asia-Pacific 29 Asia-Pacific Sector Roundup Q1 2023: Cracks In The Wall 11/14/2022
Cross-sector Asia-Pacific 30 Asia-Pacific's Strong-Dollar Problem: Inconvenience Today, Headache Tomorrow 11/10/2022
Cross-sector China 31 A Slower China: Where Are The Pockets Of Risk? 11/3/2022
Cross-sector China 32 A Slower China: Is Stimulus Working And Who's Paying For It? 11/3/2022
Cross-sector China 33 A Slower China: What Are The Macro Implications? 11/3/2022
Cross-sector China 34 China's Affordable Housing Leasing Plan Could Cost Up To RMB2 Trillion 10/31/2022
Cross-sector Emerging Markets 35 Emerging Markets Monthly Highlights: Approaching The Peak Of Tightening Cycle? 11/16/2022
Cross-sector Global 36 Credit Implications Of Hybrid Noncall Decisions 11/24/2022
Cross-sector Global 37 Global Debt Leverage: How Heavy Is The World's Debt Burden? 11/21/2022
Cross-sector Global 38 Agriculture Industry Is Still Sweating This Year’s Droughts 10/13/2022
Cross-sector Global 39 The Complications Of A Stronger Dollar 10/12/2022
Cross-sector Global 40 Credit Cycle Indicator Q4 2022: Course Correction 10/10/2022
Cross-sector U.S. 41 The U.S. Veterinary Industry Will Face Additional Challenges As We Enter An Expected Recession 11/28/2022
Cross-sector U.S. 42 U.S. Holiday 2022 Sales Outlook: Santa’s Bag Will Be Smaller This Year 11/10/2022
Cyber Global 43 Perspectives On Cyber Risk Across Corporates: The Potential Impact Of Cyber Threats Is Growing 11/8/2022
Cyber Global 44 Cyber Risk Management Is Credit Risk Management, Says Seminar 11/1/2022
Cyber Global 45 Cyber Risk In A New Era: How Cyber Risk Affects Sovereigns 10/31/2022
Economics Asia-Pacific 46 Economic Outlook Asia-Pacific Q1 2023: Global Slowdown Will Hit, Not Halt, Growth 11/28/2022
Economics Canada 47 Economic Outlook Canada Q1 2023: Economic Chills This Winter 11/28/2022
Economics China 48 China's Trend Growth To Slow Even As Catchup Continues 11/10/2022
Economics Emerging Markets 49 Economic Outlook EMEA Emerging Markets Q1 2023: Tough Choices Ahead 11/30/2022
Economics Emerging Markets 50 Economic Outlook Emerging Markets Q1 2023: Hanging In There, But Growth Prospects Remain Tough 11/29/2022
Economics Emerging Markets 51 Emerging Markets Real-Time Data: Activity Continues To Wane With Weakening Demand And Tighter Financial Conditions 11/10/2022
Economics Emerging Markets 52 Some Central Asian And Caucasus Currencies Are Unexpected Emerging Market Outperformers 11/7/2022
Economics Europe 53 Economic Outlook Eurozone Q1 2023: Reality Check 11/28/2022
Economics Europe 54 Central And Eastern Europe: Growth Freezes, Risks Mount 11/10/2022
Economics Global 55 Global Macro Update: Surprising Resilience Unlikely To Last Into 2023 11/30/2022
Economics Global 56 Dispatch from Washington: Initial takeways from the IMF and IIF Annual Meetings 10/14/2022
Economics Global 57 No Easy Way To Correct Outsized Dollar Strength 10/6/2022
Economics Latin America 58 Economic Outlook Latin America Q1 2023: A Shift To Lower Growth 11/28/2022
Economics U.K. 59 Economic Outlook U.K. Q1 2023: A Moderate Yet Painful Recession 11/29/2022
Economics U.S. 60 Economic Outlook U.S. Q1 2023: Tipping Toward Recession 11/28/2022
Economics U.S. 61 Excess Savings Is A Double-Edged Sword 11/23/2022
Economics U.S. 62 10-Year/3-Month Yield Curve The Latest Domino to Fall 11/1/2022
Environmental, social and governance Global 63 Bank Regulation And Disclosure To Foster Climate-Related Risk Analysis 10/4/2022
Environmental, social and governance Global 64 Global Sustainable Bond Issuance Likely To Fall In 2022 9/20/2022
Financial institutions Argentina, Turkey 65 Inflation's Impact On Argentine And Turkish Banks Will Depend On Its Pace And Banks' Balance Sheet Structure 10/10/2022
Financial institutions Asia-Pacific 66 Asia-Pacific Credit Outlook 2023: Financial Institutions Downside Risks Endure 11/15/2022
Financial institutions Emerging Markets 67 EMEA Financial Institutions Monitor 4Q2022: Fresh Turmoil Brings New Hardships 11/4/2022
Financial institutions Europe 68 European Banks’ Residential Mortgage Losses Should Remain Contained Even As Economies Slow 11/15/2022
Financial institutions Europe 69 Top 50 European Banks: Higher Rates Support Risk-Adjusted Capital Ratios 11/10/2022
Financial institutions Global 70 Derivatives Exchanges Are Riding The Wave Of Volatility, 2023 Could Pose A Stiffer Test 11/17/2022
Financial institutions Global 71 Global Bank Outlook 2023: Greater Divergence Ahead 11/17/2022
Financial institutions Global 72 Global Bank Country-By-Country Outlook 2023: Greater Divergence Ahead 11/17/2022
Financial institutions Gulf Cooperation Council 73 GCC Banks Will Enter An Uncertain 2023 On Solid Footing 11/7/2022
Financial institutions Ireland 74 Irish Nonbank Lenders May Capture More Of The Irish Mortgage Market 10/25/2022
Financial institutions U.K. 75 U.K. Nonbank Financial Firms Face Tests From Higher Funding Costs And Weaker Asset Values 11/28/2022
Financial institutions U.S. 76 Potential Rating Implications Of The Proposed Rules To Resolve Large U.S. Regional Banks 10/24/2022
Financial institutions U.S. 77 Business Development Companies' Asset Coverage Ratios Could Feel The Strain Of A Weakening Economy 10/20/2022
Healthcare and pharmaceuticals U.S. 78 Inflation, Labor Shortages, Supply-Chain Disruptions, And Rising Interest Rates Are Testing The Credit Resilience Of U.S. MedTech Companies 11/30/2022
Healthcare and pharmaceuticals U.S. 79 The Health Care Credit Beat: Highlights From Our 2022 Conference 10/19/2022
Infrastructure China 80 Chinese Toll Roads: Tariff Increases Far From Keeping Pace With Costs 11/29/2022
Infrastructure China 81 China Infrastructure REITs Inch Toward The Fast Lane 11/28/2022
Infrastructure China 82 China's LGFV Land Grab: Things That Can't Last Won't 11/14/2022
Infrastructure China 83 China Power Sector: IPPs Are Set To Break Their Losing Streak 10/21/2022
Infrastructure China 84 China Power Sector: Regulatory Support To Stay As Subsidies Fade 10/17/2022
Infrastructure China 85 China's Independent Power Producers Are Set To Break Their Losing Streak 10/13/2022
Infrastructure EMEA 86 EMEA Utilities: Regulation And High Prices Offset Affordability And Dividend Risks 11/14/2022
Infrastructure Europe 87 European Rail Looks To Ride The Energy Transition 11/28/2022
Infrastructure Europe 88 Europe's LNG Focus Can Bring Pain As Well As Gain For Utilities 11/9/2022
Infrastructure LATAM 89 Latin America: Inflation Pass-Through Poses Greater Challenges For Toll Roads And Mass Transit Than For Utilities, Airports, And Ports 11/22/2022
Infrastructure North America 90 N.A. Transport Infra | Essentiality Outweighs Affordability As Counterparty Risks Loom 11/29/2022
Infrastructure North America 91 North American Power & Utilities: Inflation Could Create Some Pressure For Utilities 11/28/2022
Infrastructure North America 92 For Speculative-Grade North American Energy Issuers, Refinancing Risk Is Increasing 11/7/2022
Infrastructure U.S. 93 The Inflation Reduction Act: Our Views From The Midstream Energy Perspective 10/11/2022
Insurance Asia-Pacific 94 Asia-Pacific Reinsurance Sector Update: Volatility Ahead For Risks And Returns 10/27/2022
Insurance EMEA 95 EMEA Insurance Outlook 2023: In The Midst Of The Perfect Storm 11/15/2022
Insurance Global 96 Rate Rises To Stay Sizable For 2023 P&I Renewal Despite Better Half-Year Underwriting Results 10/18/2022
Insurance U.S. 97 U.S. Property/Casualty Insurance Sector View Dims On Weakening Capitalization 10/26/2022
Leveraged finance U.S. 98 U.S. Leveraged Finance Q3 Update: 'CCC' Buckets Pick Up In CLOs As Cash Flow Generation Falls 10/27/2022
Media and telecom U.S. 99 U.S. Advertising Forecast Cut As Odds Of Recession Increase 10/13/2022
Metals and mining China 100 China Commodities Watch: Chalco, Hongqiao To Lead Aluminum Industry Transition 10/24/2022
Metals and mining Global 101 S&P Global Ratings’ Metal Price Assumptions: Lower Prices And Higher Costs Start Squeezing Profits 11/1/2022
Oil and gas China 102 China Gas Sector Easing Into Lower Demand 11/21/2022
Oil and gas Global 103 S&P Global Ratings Revises Its Oil And Gas Price Assumptions On Supply/Demand Fundamentals 11/19/2022
Public finance Australia, Canada, Mexico, And U.K. 104 Australia, Canada, Mexico, And U.K. Universities Medians: Fiscal 2021 Credit Trends Turned Positive Despite Challenges 10/20/2022
Public finance California 105 California Community Choice Aggregators Provide Consumer Choice, But Not Without Risk 11/2/2022
Public finance China 106 China Local Governments: Fiscal Expansion To Continue To Support Growth 11/28/2022
Public finance China 107 China Cities Diverge To Navigate Property Slowdown 11/1/2022
Public finance Europe 108 Central And Eastern European Local Governments Weather The War But Face Higher Spending 10/27/2022
Public finance France 109 French LRGs: Tighter Budgets Will Squeeze Capital Spending 11/22/2022
Public finance Germany 110 Inflation Bolsters German States’ Resilience To Recession 11/11/2022
Public finance Global 111 Local And Regional Governments Outlook 2023: Rougher Seas Ahead 11/30/2022
Public finance Mexico 112 Mexican Municipalities' Opportunities To Strengthen Credit Quality After Mayoral Reelection Remain Limited 11/23/2022
Public finance U.K. 113 Inflation To Erode The Performance Of U.K. Public Finance Sectors 11/29/2022
Public finance U.S. 114 Advancing Or Adapting: The State Of Play In U.S. Higher Education 11/29/2022
Public finance U.S. 115 U.S. Not-For-Profit Cultural Institutions’ Credit Quality Held Steady During The Pandemic 11/29/2022
Public finance U.S. 116 U.S. Transportation Infrastructure Toll Sector Update And Medians: Rebounding Traffic And Toll Increases Are Key Ingredients For Credit Strength And Stability 11/18/2022
Public finance U.S. 117 U.S. Social Housing Providers: Unprecedented Federal Pandemic Support And Beyond 11/17/2022
Public finance U.S. 118 Florida And South Carolina Local Governments' Credit Quality Remains Sound Despite Damage From Hurricane Ian 11/11/2022
Public finance U.S. 119 Market Insights Sector Intelligence | U.S. Public Finance 11/10/2022
Public finance U.S. 120 Hurricane Ian: What Comes Next For Government And Related Credits In The Storm’s Broad Path? 10/3/2022
Real estate China 121 China Property Is Heading For A Transformation, And Maybe A Turnaround 11/21/2022
Real estate Hong Kong 122 Hong Kong Property: A Year Of Cyclical Pain In 2023 10/31/2022
Real estate South Asia 123 Southeast Asia Property Update: Cautious Growth Ahead 11/21/2022
Real estate U.S. 124 Real Estate Monitor: Negative Rating Bias Grows In The U.S. Real Estate Sector 9/19/2022
Sovereigns Brazil 125 What Will Lula's New Presidency Imply For Our Sovereign Credit Rating On Brazil? 11/1/2022
Sovereigns Global 126 A Closer Look At The G-20 Expert Panel Review Of MLIs' Capital Adequacy Frameworks 10/11/2022
Structured finance China 127 China Securitization Performance Watch 3Q 2022: Sectors' Performance Diverging On Lockdowns, Market Volatility 11/11/2022
Structured finance Denmark 128 Danish Covered Bond Market Insights 2022 11/22/2022
Structured finance EMEA 129 EMEA Structured Finance Chartbook 11/16/2022
Structured finance Europe 130 European Auto ABS Appear Resilient To A Potential Fall In Used Car Prices 11/29/2022
Structured finance Europe 131 European CMBS Monitor Q3 2022 10/17/2022
Structured finance Global 132 Inside Global ABCP: Market Uncertainties Could Dampen Issuance Growth 10/25/2022
Structured finance Latin America 133 Latin America Structured Finance Surveillance Chartbook 10/26/2022
Structured finance U.K. 134 U.K. Buy-To-Let RMBS: Sheltered But Not Immune To Rate Rises 11/24/2022
Structured finance U.S. 135 Rising Rates Amid Looming Balloon Dates: Performance Update And Scenario Analysis For Lodging-Backed CMBS 11/16/2022
Structured finance U.S. 136 U.S. CMBS Delinquency Rate Decreased 1 Bp To 2.5% In October 11/1/2022
Structured finance U.S. 137 Exploring The Potential Impact Of Office Value Declines Beyond The Base Case In U.S. Conduit CMBS 10/21/2022
Structured finance U.S. 138 Housing Overvaluation May Be Peaking: How It Affects U.S. RMBS 10/17/2022
Structured finance U.S. 139 U.S. CMBS Update Q3 2022: Tribulations Abound 10/17/2022
Technology Asia-Pacific 140 Asia-Pacific Tech Firms Face Long-Term Risk From China Chip Restrictions 10/13/2022
Technology China, U.S. 141 Technology And Geopolitics: What If The Semiconductor Industry Bifurcates? 11/14/2022
Technology U.S. 142 Winter Is Coming For U.S. Tech 11/16/2022
Technology U.S. 143 U.S. Chips On A New Block With Expanded China Restrictions 10/19/2022
Transportation Europe 144 Europe's Remarkable Air Passenger Traffic Recovery Faces A Trickier 2023 11/21/2022

Key Takeaways From Our Most Recent Reports


1. Italian Corporate Outlook 2023: High Energy Costs May Constrain Competitiveness, Nov. 15, 2022

Renato Panichi, Italy, + 39 0272111215,

  • Four-fifths of rated companies have a stable outlook, which indicates credit resilience ahead of a potential recession in 2023. Negative outlooks have increased to 12% from a low 2% at end-2021, but they remain well below the level during the COVID-19 pandemic.
  • Revenues should increase by about 5% in 2023, as likely falling volumes due to the weaker economic environment should partly offset the continued pass-through of cost inflation.
  • High energy costs are a key issue for Italian companies and, if persistent, could impair their competitiveness. Average wholesale natural gas price has exceeded €100 per megawatt hour (/MWh) in 2022, 5x higher than 2019. The average wholesale electricity purchase price was about 9x higher in third-quarter 2022 than in 2019.
  • Stable average margins in 2022-2023 mask significant differences between sectors. All sectors with high or moderate energy intensity will experience substantial margin pressure in 2022-2023, notwithstanding successful cost pass-through.
  • We expect corporate investment growth to moderate in 2023 compared with 2022, when companies benefited from a lag effect from the 2021 business recovery. Construction volumes should benefit from the infrastructure works linked to Italy's recovery and resilience plan, the PNRR, but residential renovation should moderate in 2023.
  • Yields have widened significantly since the beginning of 2022. Persistent high interest rates mean that companies with high debt burdens will see their debt-service ratios worsen significantly over the next few years.

2. Saudi Capital Markets Will Be Key To Powering Corporate Investments, Nov. 29, 2022

Sapna Jagtiani, Dubai, +97143727122,

  • Government reforms and high oil prices are creating significant investment opportunities for Saudi Arabian corporates.
  • We understand that the country's investment needs are significant given the many government schemes, investment commitments, and private sector spending plans through to 2030. Gauging exact funding requirements and timing is not easy, but it is clear that the banking sector will not be able to meet all needs despite its strong capitalization.
  • The capital markets will play a key role in funding not just private sector investments but also giga-projects such as Neom, the IPO for which is expected in 2024.
  • We do not anticipate taking any immediate rating actions on Saudi corporates--even as they carve out significant capital spending budgets over the next two-to-five years--given their healthy balance sheets and strong liquidity. Over time, however, we will reassess our ratings as projects are executed because any rating upside would hinge on business trends improving, sustainable EBITDA growth, or stronger leverage metrics.

3. Corporate Defined Benefit Pension Schemes: U.K. Liquidity Crisis Masks A Positive Global Trend Thanks To Higher Discount Rates, Nov. 14, 2022

Sam C Holland, FCA, London, +44 20 7176 3779,

  • Unprecedented volatility in the gilt market in September created exceptional liquidity stress for U.K. corporate defined benefit (DB) pension schemes using Liability-Driven Investment (LDI) strategies.
  • Timely intervention by the Bank of England through gilt purchases and the creation of a temporary collateral repo facility helped DB pension schemes survive a liquidity crisis. There was no solvency threat to U.K. DB pension schemes, in our view.
  • In fact, the solvency of most DB pension schemes across the globe, including the U.K., has improved significantly thanks to a substantial increase in 'AA' corporate bond yields.
  • Higher interest rates result in higher discount rates on the net present value of DB pension schemes, thereby reducing the financial burden of the schemes, which could benefit their sponsors' creditworthiness in the long term. Of course, higher interest rates are a negative in other ways for corporate borrowers, so the overall picture for credit is more nuanced.
  • Lower funding deficits may encourage some corporate sponsors to reduce their exposure to legacy DB pension schemes by arranging a buy-in or buyout with an insurance company. We generally view such actions as neutral to credit because there are added costs associated with lower volatility.

4. Accounting Hot Topics On The Horizon And Their Credit Metric Relevance, Nov. 15, 2022

Leonard A Grimando, New York, + 1 (212)438 3487,

  • The Financial Accounting Standards Board (FASB) has released a new accounting update requiring disclosures of reverse-factoring/supply-chain finance arrangements starting in 2023. S&P Global Ratings typically views payments made after 90 days by buyers to financial intermediaries involved in reverse-factoring programs as a form of borrowing.
  • The surge in interest rates will likely lead to improved pension funding at year-end 2022; however, other factors such as market performance, asset mix, and company contribution levels will also come into play.
  • U.S. private companies will report under the new lease accounting standard in their 2022 annual reports when they report in early 2023. We expect ratings changes to be minimal.
  • The FASB has added a project on certain crypto assets. In analyzing a company's cash and investments, we focus on its accessibility and liquidity. We don't treat digital assets as cash and cash equivalents for netting debt, but rather consider them qualitatively.
  • Highly leveraged issuers could be pressured from the lower interest expense deductibility for tax reporting, absent tax planning, net operating losses (NOLs), and tax credits resulting in higher taxes paid. The change will mainly have a negative impact on funds from operations (FFO) and will reduce accessible cash for offsetting debt.
Credit trends and market liquidity

5. 'BBB' Pulse: Fallen Angel Trend Resists Pressures, Nov. 24, 2022

Vincent R Conti, Singapore + 65 6216 1188,

  • Ratings at the cusp of investment grade proved stable in October, but difficult economic and financing conditions continue to threaten disruption.
  • In a sign of ongoing stability, the number of fallen angels as a percentage of investment-grade issuers remains well below the long-term average, though the post-pandemic reduction in the number of potential fallen angels has stalled.
  • Real estate, consumer products, and utilities sectors have the most potential fallen angels among non-financial corporates, given their exposure to inflation pressures and rising rates.

6. Weakest Links Rise, Signaling Defaults Ahead, Nov. 15, 2022

Nicole Serino, New York, +1(212)4381396,

  • The global weakest links tally increased to 239 as of Oct. 17 from 220 as of Sept. 19 as downgrades to 'B-' rose amid deteriorating economic and credit conditions.
  • Consumer products and high technology led the new additions to the tally.
  • Despite rising weakest link totals, Europe is the only region where weakest links are above their long-term average.
  • Because weakest links make up a larger share of defaults in periods of economic stress, we can expect defaults to increase following the recent rise in weakest links.

7. Europe And Emerging Markets Are Default Hotspots, Nov. 11, 2022

Nicole Serino, New York, +1(212)4381396,

  • The global corporate default tally rose by seven to 68 as of Oct. 31, four above comparable 2021 levels. Both Europe and emerging markets have higher year-to-date defaults than 2021.
  • Europe added three defaults, and we estimate the European trailing-12-month speculative-grade corporate default rate will jump to 1.8% as of October 2022 from 1.3%.
  • Defaults in emerging markets continue to climb and are closing in on 2x 2021 year-to-date levels.

8. Risky Credits: In Emerging Markets, Downward Rating Transitions Prevail, Nov. 22, 2022

Luca Rossi, Paris, +33 6 2518 9258,

  • The number of issuers rated 'CCC+' or lower in emerging markets (EMs) rose to 23 in third-quarter (Q3) 2022 from 21 as of June 30, 2022, and now constitutes 13% of speculative-grade entities we rate in EM17*, up from 11% in the second quarter.
  • Refinancing risk is a key consideration, with 41% of ratings in the 'CCC' and 'C' categories carrying a negative outlook or CreditWatch and debt of $17.1 billion nearing the 2020 peak of $18.1 billion.
  • Argentina has the highest number of ratings in the 'CCC' and 'C' categories, followed by Brazil, while by sector, real estate, transportation, and utilities lead the tally.

9. The European Speculative-Grade Corporate Default Rate Could Rise To 3.25% By September 2023 As Downside Risks Rise, Nov. 17, 2022

Nick W Kraemer, New York, + 1 (212) 438 1698,

  • We expect the European trailing-12-month speculative-grade corporate default rate to reach 3.25% by September 2023, from 1.4% in September 2022. In this baseline forecast, 25 speculative-grade companies would default owing to slowing economic growth, a technical recession in the U.K., increasingly difficult financing conditions, and falling profit margins.
  • Recession odds are rising for Europe, particularly as interest rates climb and energy prices remain volatile, with the potential for more increases on both fronts.
  • We think the European speculative-grade corporate population faces many potential challenges--which, if they occur, could lead to defaults edging higher toward our pessimistic case.
  • With inflation remaining high and central banks raising rates quickly, any shock to energy prices would push consumer spending down, which would likely result in even more interest rate hikes.

10. Risky Credits: North America's 'CCC+' And Below Rated Debt Reaches $230 Billion, Nov. 24, 2022

Nicole Serino, New York, +1(212)4381396,

  • The number of 'CCC+' and below rated corporate issuers increased to 148 in October 2022, from 140 in September 2022, as the trailing three-month rating transition from 'B-' to 'CCC' increased to 1.9% from 1.6%, in the same period.
  • Total debt outstanding of 'CCC+' and below issuers has now reached an 17-month high, jumping to US$ 230 billion from US$134 billion in the previous month.
  • The healthcare sector led the increase in risky credits with three in October as certain lower-rated issuers in the sector face weaker than expected operating performance resulting in wider-than-expected cash flow deficits and weak liquidity.
  • The consumer products sector leads with the most issuers rated 'CCC+' and below, as 31 issuers, -90%, are at risk for further downgrade.

11. The U.S. Speculative-Grade Corporate Default Rate Could Reach 3.75% By September 2023, Nov. 21, 2022

Nick W Kraemer, FRM, New York, + 1 (212) 438 1698,

  • We expect the U.S. trailing-12-month speculative-grade corporate default rate to reach 3.75% by September 2023, from 1.6% in September 2022. To reach this baseline forecast, 69 speculative-grade companies would need to default.
  • This is a slight uptick in our default expectations from last quarter, since our economists now expect a recession in 2023, inflation remains high, consumer sentiment is falling, and floating-rate borrowing costs continue to rise.
  • Much will depend on the depth or duration of the recession, which for now is expected to be short and shallow. Continued interest rate increases by the Fed could add further stress.
  • If a deeper or longer recession were to occur--and in particular a stubborn, elevated rate of inflation--our pessimistic scenario of a 6% default rate (111 defaults) could be realized.

12. Asia-Pacific Sector Roundup Q1 2023: Cracks In The Wall, Nov. 14, 2022

Eunice Tan, Hong Kong, +852-2533-3553,

  • Confluence of headwinds. Asia-Pacific is fighting on four fronts: the global economic slowdown, high inflation, rising interest rates, and weakening currencies. China is contending with subdued growth amid its COVID policy stance and real estate sector woes. And some sectors and issuers in the region are feeling the heat from rising geopolitical tensions (e.g., Asia-Pacific tech firms amid the U.S. Chips Act). These risks are forming cracks in Asia-Pacific's credit wall.
  • A greater divide. Monetary policy remains divergent across Asia-Pacific central banks. Most continue to hike rates to slow inflation and stem capital outflows; China and Japan are exceptions. Concurrently, domestic currency depreciation has created winners and losers. The region's exporters benefit from being competitive, but midstream and downstream sectors dependent on imported materials could see costlier inputs, denting margins. The ability to pass through input costs will differentiate corporate sectors.
  • Higher financing, tighter liquidity. The availability of and access to financing could tighten as investors and lenders turn more selective. Demand for higher yields and a strong U.S. dollar could intensify debt burdens, particularly for offshore borrowers. To cope, borrowers could turn onshore by tapping bank loan facilities and domestic capital markets. While banks could see higher interest income from such loans, the economic downturn may entail higher loan-loss provisions.

13. Asia-Pacific's Strong-Dollar Problem: Inconvenience Today, Headache Tomorrow, Nov. 10, 2022

Simon Wong, Singapore, (65) 6239-6336,

  • Dollar strengthening, a source of much pain among Asia-Pacific corporates historically, has been mostly manageable so far this year; however, increased input costs and rising rates are hitting some pockets of our rated portfolio.
  • Corporates facing low to moderate risk of local-currency depreciation usually have hedging in place, or have the ability to pass through higher input costs; exporters with substantial dollar revenue have also benefited from the strong dollar.
  • Widening current account deficits in some emerging markets make further depreciation likely, adding stress to firms with large maturing dollar debt.

14. Emerging Markets Monthly Highlights: Approaching The Peak Of Tightening Cycle?, Nov. 16, 2022

Jose Perez Gorozpe, Spain, +34 914233212,

  • Headline inflation started to moderate across some emerging markets (EMs). With a few exceptions, energy inflation decreased across most key EMs, in line with current global trends. Nevertheless, core and food inflation continues to increase outside of LatAm, suggesting a more persistent nature of inflationary pressures.
  • Approaching the peak of the tightening cycle?Some economies in EM EMEA and LatAm have paused the tightening path, and we expect several central banks in LatAm to cut interest rates next year. Nevertheless, uncertainty over the food and energy prices outlook, as well as potential persistence of core inflation, suggest upside risks to current policy rates, especially among Central and Eastern European (CEE) economies.
  • The EM GDP growth pace is decelerating in line with our expectations. Q3 data has been published for most key EMs, pointing to a deceleration (with a few exceptions, notably China). Risks to growth remain substantial, especially in CEE, where we expect full-year recession in a downside scenario that includes disruption of energy supplies, a deeper economic downturn in Western Europe, and higher global interest rates.
  • Financing conditions appeared stable last month, but significant divergence exists among regions. Risk premia has stabilized in EM EMEA and LatAm. Spreads in EM Asia have widened, given concerns about China's zero-Covid stance. Taking into consideration external macroeconomic environment, we expect spreads to remain volatile in the nearest term.

15. Credit Implications Of Hybrid Noncall Decisions, Nov. 24, 2022

Michelle M Brennan, London, + 44 20 7176 7205,

  • Given the volatile market conditions, S&P Global Ratings expects more issuers to choose not to call their hybrid capital instruments on the first optional call date.
  • The optional nature of a call is a key feature of hybrids and we expect more issuers to choose not to call in order to help manage their capital, the carrying cost of their hybrids, and the timing of any refinancing.
  • A noncall decision does not constitute a default and can be credit-supportive. We still recognize the financial benefits of an uncalled hybrid, even when we no longer consider that it has equity content.
  • Previous noncalls have shown that the reputational effect is relatively short-lived, but hybrid investors will likely price in the risk of a noncall more explicitly, setting a pricing premium for some sectors or issuers. The era of cheap hybrid financing is over, for now.

16. Global Debt Leverage: How Heavy Is The World's Debt Burden?, Nov. 21, 2022

Terence Chan, Melbourne, + 61 3 9631 2174,

  • Global leverage is at a historic high of 349% based upon global debt-to-GDP--more than 25% higher than the 278% in the pre-2008 financial crisis era.
  • Specifically, rated sovereigns took advantage of the protracted period of low interest rates that central banks had maintained, to expand their debt-to-GDP ratio by more than one-third, to a projected 87% in 2022, from 62% in 2008.
  • Resolving the debt overhang, amid slower growth and higher interest rates, could be painful--with governments cutting expenditures and borrowers defaulting.

17. The U.S. Veterinary Industry Will Face Additional Challenges As We Enter An Expected Recession, Nov. 28, 2022

Jeff J Guan, CFA, Toronto, (1) 416-507-3287,

  • How is the veterinary industry positioned coming out of the COVID-19 pandemic? Our ratings on veterinarian companies were negatively skewed during the early stages of the pandemic because of lower patient volumes and the rapid pace of acquisitions that resulted in high leverage and low cash flow generation. As a result, spending across the pet industry reached around $124 million in 2021, up from about $90 million in 2018.
  • Will a recession affect veterinary health spending? We expect high inflation followed by a recession will lead to lower discretionary spending in the veterinary industry, including lower adoption rates and fewer vet visits for current pet owners.

18. U.S. Holiday 2022 Sales Outlook: Santa’s Bag Will Be Smaller This Year, Nov. 10, 2022

Sarah E Wyeth, New York, + 1 (212) 438 5658,

  • S&P Global Ratings analysts in the retail, restaurant, and consumer goods sectors collectively forecast a 4.5% increase in retail sales during the November and December 2022 holiday season.
  • Adjusted for inflation, we expect holiday sales to contract as consumers allocate more of their budgets to essentials like food and gas.
  • Retailers will need to use promotions and discounts to clear excess inventory that accumulated as port congestion eased earlier in the year.
  • Weak volumes and persistent cost inflation will negatively affect credit quality of retailers most exposed to holiday shopping, along with their suppliers of discretionary categories such as durables, household products, apparel and durables.

19. Economic Outlook Asia-Pacific Q1 2023: Global Slowdown Will Hit, Not Halt, Growth, Nov. 28, 2022

Louis Kuijs, Hong Kong, +852 9319 7500,

  • While China's growth is likely to remain subdued in the coming months, it should pick up in 2023 as the government eases its COVID stance and the property market stabilizes.
  • Lower global growth and higher interest rates should slow other Asia-Pacific economies next year. But we generally expect GDP growth to stay healthy.
  • Amid hefty U.S. interest rate hikes and deteriorating current-account positions in several countries, some central banks will need to lift rates more than inflation considerations warrant.

20. Economic Outlook Canada Q1 2023: Economic Chills This Winter, Nov. 28, 2022

Beth Ann Bovino, New York, + 1 (212) 438 1652,

  • After solid gains in the third quarter, Canada's economic momentum is beginning to decelerate heading into the new year.
  • The impact of higher prices and interest rates, combined with a recession for the U.S. in 2023, leaves the Canadian economy struggling to maintain its foothold on weakening expansion.
  • We expect Canadian GDP to come in at 3.1% for 2022, the same as in our September forecast, and for Canadian growth to decelerate to a flat reading for 2023 (previously up 1.1%).

21. Economic Outlook EMEA Emerging Markets Q1 2023: Tough Choices Ahead, Nov. 30, 2022

Tatiana Lysenko, Paris, + 33 14 420 6748,

  • Terms of trade have worsened considerably for energy-importing economies, especially in European emerging markets (EM), and are unlikely to change meaningfully next year, forcing a stronger economic adjustment; we expect sharply lower 2023 GDP growth in Poland (0.9%), Hungary (0.2%), and Turkiye (2.4%), compared with this year's strong outturns.
  • Once the external environment improves, Central and Eastern European economies should regain their momentum, with GDP growth recovering to above 3% in 2024. We acknowledge high uncertainty regarding policy settings in Turkiye after parliamentary and presidential elections next year.
  • Economic projections for oil exporters in the Gulf are still upbeat, while commodity-exporting countries on the African continent will likely have mixed fortunes where price declines for some exports offset benefits from increased demand for others.
  • Central banks will continue to walk a delicate line between taming inflation, anchoring inflation expectations, and preventing a sharp economic downturn. This dilemma is especially notable in Central and Eastern Europe, where GDP growth is set to decelerate sharply in late 2022 to early 2023, while inflation is still trending up.

22. Economic Outlook Emerging Markets Q1 2023: Hanging In There, But Growth Prospects Remain Tough, Nov. 29, 2022

Satyam Panday, San Francisco, +1 (212) 438 6009,

  • Emerging markets (EMs) have navigated better than expected so far this year through strong global crosswinds. Still, growth will weaken into next year as prospects for economic growth in the coming quarters remain difficult.
  • S&P Global Ratings lowered its real GDP growth forecasts for EMs to 3.8% in 2023 (was 4.1%). The downward revision to growth comes from all EMs excluding China and Saudi Arabia, with most economies poised to expand below their longer-run trend rates. Forecasts for 2024 and 2025 remain broadly unchanged, averaging 4.3%.
  • EM inflation appears to have passed the peak or is peaking soon in this cycle. Even as inflation is forecasted to ease in most EMs next year driven primarily by falls in food and fuel inflation, it's poised to remain above many EM central banks' respective targets in 2023.
  • As such, monetary policy rates are likely to stay high for the time being. But the deceleration in inflation--coupled with a worsening growth outlook--could bring policy easing onto the agenda in several EMs (especially in Latin America) by the middle of next year.
  • The long shadow of Russia-Ukraine conflict, the lingering pandemic, and a sharper central banks led tightening of financial conditions to quell inflation remain key downside risks for EMs.

23. Emerging Markets Real-Time Data: Activity Continues To Wane With Weakening Demand And Tighter Financial Conditions, Nov. 10, 2022

Satyam Panday, San Francisco, +1 (212) 438 6009,

  • Emerging market economic activity has slowed further amid elevated prices and tighter financial conditions.
  • However, commodity prices have continued to decline as supply-chain constraints improve.
  • The currency weakening against the U.S. dollar remains a major challenge in the region.

24. Economic Outlook Eurozone Q1 2023: Reality Check, Nov. 10, 2022

Sylvain Broyer, Frankfurt, + 49 693 399 9156,

  • The European economy's strong momentum will almost come to a halt early next year. Sticky inflation, stunted hiring, and higher interest rates will be clear negatives. But a substantial acceleration in wages and stronger public investment should support domestic demand and steer the economy toward a modest recovery from the middle of next year.
  • As 2022 comes to a close, manufacturing production in the EU is at an all-time high, even if energy-intensive sectors have curtailed activity because of higher costs. The hiring cycle is still strong and driving consumption.
  • On the other hand, the policy rate cycle is probably closer to the end than the beginning, but also isn't over yet. We expect the ECB to hike rates by another 75 basis points before pausing. What's more, its balance sheet could shrink by almost €3 trillion in three years.

25. Central And Eastern Europe: Growth Freezes, Risks Mount, Nov. 10, 2022

Tatiana Lysenko, Paris, +33 -14 -420-6748,

  • Worsening geopolitical and financial conditions have dented growth momentum in Central and Eastern Europe. A sharp growth slowdown is already underway as persistently high inflation is eroding consumer purchasing power, financial conditions tighten, and the impetus from reopening economies and pent-up demand fades.
  • In our downside scenario, most CEE-6 economies would be in recession in 2023. This scenario assumes a complete cut-off of gas supplies from Russia, subsequent economic recession in Germany, and tighter global financing conditions, which would knock off 2.1 percentage points from our baseline 2023 forecast for regional 1.4% GDP growth.
  • The scale of the shock triggered by the Russia-Ukraine war could lead us to revise some of our baseline macroeconomic and rating assumptions for CEE-6 sovereigns, which would weigh on our view of sovereign credit quality. We point out four key risks for CEE-6 sovereigns a sharp economic downturn amplified by recession in broader Europe, the constrained ability of CEE-6 governments to benefit from EU transfers, elevated fiscal pressures, and suboptimal monetary policy choices.

26. Global Macro Update: Surprising Resilience Unlikely To Last Into 2023, Nov. 30, 2022

Paul F Gruenwald, New York, + 1 (212) 437 1710,

  • Global activity has held up surprisingly well so far despite a torrid pace of policy rate hikes and consistently high geopolitical uncertainties. Recent outperformance will not last in our view. We see significant slowdowns ahead. Labor markets are key to determining the depth of the downturn.
  • Getting inflation under control while minimizing damage to output remains the main macro policy challenge; the lagged effects of rate hikes will make assessing this difficult. Given the big inflation miss over the past two years, policymakers will err on the tough side.
  • Our growth forecasts are generally higher for 2022 relative to our previous round, but broadly unchanged for 2023-2025. Inflation forecasts are higher and stickier. Risks are on the downside.
  • 2023 will be a revelatory year. We will learn how much monetary tightening is needed to curb inflation, how deep any recession will be, and the early contours of the post COVID-economy. We suspect the post-COVID world will differ from the pre-COVID world across several dimensions.

27. Economic Outlook Latin America Q1 2023: A Shift To Lower Growth, Nov. 30, 2022

Elijah Oliveros-Rosen, New York, + 1(212)438 2228,

  • We expect GDP growth in Latin America to slow significantly to 0.7% in 2023, from 3.4% in 2022, as external demand weakens, tighter financial conditions squeeze investment, and domestic demand softens after a remarkably strong performance in 2022.
  • We forecast that the cyclical shift to lower growth in the region, characterized by more moderate inflation, will lead to the start of interest rate-cutting cycles next year. In 2024, we expect growth to return to its traditionally low rate of just over 2%.
  • Amid low economic growth, lack of visibility about the fiscal response could generate investor uncertainty, especially in economies that have recent changes in government, such as Brazil and Colombia.

28. Economic Outlook U.K. Q1 2023: A Moderate Yet Painful Recession, Nov. 28, 2022

Boris S Glass, London, + 44 20 7176 8420,

  • The U.K. economy will enter 2023 in a weaker position than previously thought. We now forecast a 1% contraction before a moderate rebound sets in, weighed down somewhat by recent fiscal tightening.
  • The labor market is set to remain relatively resilient and prevent a worse outcome.
  • We think inflation will peak at 12% within months and remain elevated during the first half of 2023, averaging 7%.
  • The Bank of England doesn't have much further to go with its hikes before pausing and reassessing the impact of its policy. We expect the bank rate to peak at 3.5% in February and remain there during most of 2023.

29. Economic Outlook U.S. Q1 2023: Tipping Toward Recession, Nov. 29, 2022

Beth Ann Bovino, New York, + 1 (212) 438 1652,

  • GDP growth: Economic momentum has slowed with a recession next year increasingly likely. As extremely high prices damage purchasing power and aggressive Federal Reserve policy increases borrowing costs, we continue to expect a shallow recession for the U.S. economy in the first half of 2023. Our U.S. GDP growth forecast is 1.8% for 2022 and -0.1% for 2023, a bit weaker than our September economic update (was 1.6% and 0.2%, respectively).
  • Midterm election: The outcome from the 2022 midterm election is a gridlocked Congress for the next two years, with slim majorities in both the House and Senate. A divided government usually reduces any prospects for major changes in economic policies.
  • Labor force: Job gains have softened slightly, particularly for interest rate-sensitive industries, as the economy cools, but not enough for the Fed to moderate its tightening stance dramatically. The workforce has 4 million fewer workers than its pre-pandemic trend rate, and 83% of those 4 million fewer workers are women.
  • Unemployment: The U.S. recession will weaken job market conditions next year. As demand dries up on reduced affordability, businesses will be forced to trim payrolls. The unemployment rate is expected to peak at 5.6% in fourth-quarter 2023, then slowly descend to 4.7% by fourth-quarter 2025, 1 percentage point higher than 3.7% in October.
  • Inflation: Inflation likely peaked in third-quarter 2022 and is expected to remain high on continued supply-chain disruptions. Core prices, excluding food and fuel, are expected to remain well above the Fed's 2.0% target until late 2024. On weaker demand, businesses may need to unload inventories at reduced prices, pushing inflation lower--good news for the Fed mandate, but at a cost.
  • The Fed: The Fed will keep monetary policy tight, despite economic damage, until inflation begins to moderate in late 2023. The fed funds rate is expected to peak at 5.00%-5.25% by second-quarter 2023 (previously our downside scenario). As prices stabilize, the Fed cuts rates in late 2023. The risk is for more rate hikes this year and the next.

30. Excess Savings Is A Double-Edged Sword, Nov. 23, 2022

Beth Ann Bovino, New York, + 1 (212) 438 1652,

  • The US economy remains resilient despite a difficult environment. Third quarter GDP was above expectations at 2.6%. Even though output contracted in the first two quarters of the year, real personal consumption growth – the most important component of US demand – remained solid.
  • A key buffer moderating the slowdown has been the excess household savings. These savings are the result of fatter paychecks, high stock prices and the generous COVID stimulus, which was not fully spent.
  • The US fiscal numbers have improved sharply. On official measures, the US fiscal accounts have recorded an impressive turnaround this year on the reopening effect. Consumer spending surged to 8.1% in 2021, a 73-year record high and GDP growth reach a 37-year high, to boost tax revenues.
Financial institutions

31. Asia-Pacific Credit Outlook 2023: Financial Institutions Downside Risks Endure, Nov. 15, 2022

Geeta Chugh, Mumbai, +912233421910,

  • Lower growth. Asia-Pacific's economic growth is being hit by potential recessions in the U.S. and Europe, and China's lower growth rates. As the region is a net exporter, a global slowdown will hinder the recovery of corporate and government revenues, which in many cases aren't yet back to 2019 levels.
  • Higher cost of goods. Although consumer price index (CPI) inflation in parts of Asia-Pacific is tamer versus Europe or the U.S., the higher prices of energy, commodities and other goods are hurting borrowers. Energy subsidies are squeezing government finances. Many corporates have yet to fully pass through the additional cost of goods, implying CPI inflation could persist.
  • Tighter financing. Excepting China and Japan, official interest rates in the region are rising--in part to combat inflation, in part to defend domestic currencies against the strong U.S. dollar. Chinese authorities have lowered policy rates to boost the economy. Meanwhile, the Bank of Japan refuses to cave into market pressure. Regardless, investors and lenders are becoming more selective, particularly toward the lower end of the credit scale. This implies financing conditions may further tighten.

32. European Banks’ Residential Mortgage Losses Should Remain Contained Even As Economies Slow, Nov. 15, 2022

Nicolas Charnay, Frankfurt, +49 69 3399 9218,

  • We expect the performance of European banks' residential mortgage loan books will remain resilient to economic slowdowns in most European countries, with higher, but still limited, credit losses even if house prices correct.
  • For countries with the highest overvaluation risks, banks benefit from relatively strong mitigants--such as the strength of household finances--which should limit mortgage credit losses.
  • In countries with traditionally weaker safeguards for banks--as evidenced by historically worse mortgage performance--we have seen limited signs of overheating house prices, and our base case for softer economic activity and labor markets in most of these countries remains broadly supportive of mortgage performance.
  • For weaker borrowers that are experiencing the worst of the cost of living squeeze, banks and governments would likely seek ways to promote some restructuring of mortgage lending terms, and associated credit costs would likely remain contained.
  • If we changed our view of the relative strengths or weaknesses in a given banking system's mortgage market, we would likely reflect this in our economic risk assessment for that system. In turn, this could influence our ratings on banks that we see as materially exposed to this asset class.

33. Top 50 European Banks: Higher Rates Support Risk-Adjusted Capital Ratios, Nov. 10, 2022

Mehdi El mrabet, Paris, + 33 14 075 2514,

  • We expect a pause in the long running improvement to capitalization among Europe's top 50 banks, with lower lending and business activity leaving average risk-adjusted capital (RAC) ratios at about 11.3% over 2023.
  • Strong capitalization should remain a generally neutral or positive influence on our ratings, and the banking sector should stay profitable as higher interest rates offset rising costs.
  • A deep recession could prompt banks to reconsider shareholder distributions to protect capital.

34. Derivatives Exchanges Are Riding The Wave Of Volatility, 2023 Could Pose A Stiffer Test, Nov. 17, 2022

Giles Edwards, London, + 44 20 7176 7014,

  • Financial market infrastructure is likely to remain one of the strongest-performing sectors under the difficult economic and market conditions that seem likely to persist over the coming months.
  • While equity markets have suffered, operators of derivatives exchanges and clearinghouses are seeing a particularly strong uplift in cyclical activity, and so earnings.
  • This surge arises from a heady mix of geopolitical events, cyclical shifts, and structural changes, none of which will rapidly dissipate.
  • Because further episodes of extreme volatility or illiquidity in financial markets seem likely in 2023, collateral and liquidity will remain critical to the efficient functioning of the financial system.
  • These episodes could pose a stiffer test for all FMIs in 2023, though we expect earnings performance to remain solid and clearinghouses--the financial system's central counterparties--to remain resilient.

35. Global Bank Outlook 2023: Greater Divergence Ahead, Nov. 17, 2022

Emmanuel Volland, Paris, +33-1-4420-6696,

  • The darkened economic outlook presents headwinds for banks' asset quality, business volumes, and financing conditions. Positively, earnings greatly benefit from the monetary policy tightening.
  • Rating trends across the global banking sector will be tested in 2023. Our banks' net outlook ratio is likely to deteriorate from a 6% positive.
  • The likelihood of economic recession in Europe and the U.S. has increased; inflation is at multi-decade highs in many countries; and the spillover from the Russia-Ukraine war continues.
  • Strong bank balance sheets should buffer headwinds, with solid capitalization and sound asset quality.
  • We anticipate increasing credit divergence. Deterioration will be more acute for emerging market banks, nonbank financial institutions, and entities in countries most exposed to energy restrictions

36. Global Bank Country-By-Country Outlook 2023: Greater Divergence Ahead, Nov. 17, 2022

Gavin Gunning, Melbourne, +61-3-9631-2092,

  • Global banks are much better capitalized than in the past, offering them some resilience against weaker economic growth and high inflation.
  • A key risk to bank ratings is the emergence of harsher economic and financing conditions than our base case. Additional key risks are potentially higher corporate insolvencies exacerbated by high corporate leverage, high government leverage, and weaker property sectors.
  • We anticipate increasing credit divergence between the strong and weak. Challenges may be more acute and swift for NBFIs, and certain emerging market banks. Entities in countries most exposed to energy restrictions may also be challenged.

37. U.K. Nonbank Financial Firms Face Tests From Higher Funding Costs And Weaker Asset Values, Nov. 28, 2022

Richard Barnes, London, + 44 20 7176 7227,

  • Rated U.K. nonbank financials will be tested by higher funding costs, the slowing domestic economy, and weaker asset values.
  • We maintain stable outlooks on most of the rated firms in the sector because we think they are well placed to navigate the tough operating environment at their current diverse rating levels.
  • Rating pressures could grow if economic or market indicators materially underperform our base case expectations.
Health care and pharmaceuticals

38. Inflation, Labor Shortages, Supply-Chain Disruptions, And Rising Interest Rates Are Testing The Credit Resilience Of U.S. MedTech Companies, Nov. 30, 2022

Alice Kedem, Boston, + 1 (617) 530 8315,

  • Multiple macroeconomic pressures--including persistent inflation, labor shortages, supply-chain disruptions, unfavorable foreign exchange rates, the energy crisis in Europe, and rising interest rates--have created an adverse operating environment for the medical technology (MedTech) sector, an industry that was traditionally considered stable and non-cyclical.
  • The potential impact on ratings depends on a company's ability to manage these risks and capacity for underperformance within the rating thresholds.
  • Some lower-rated medical device companies are less well-positioned to navigate the ongoing headwinds, including all 'B-' rated issuers and some 'B' rated ones, and many companies in the 'CCC' category are facing elevated refinancing risk over the next two years.
  • At the same time, nearly all 'B+' rated MedTech companies have a sufficient cushion for underperformance within the rating, and except for a few companies with leverage that's materially elevated because of recent acquisitions, most investment-grade issuers are well-positioned to weather the storm.

39. Chinese Toll Roads: Tariff Increases Far From Keeping Pace With Costs, Nov. 29, 2022

Laura C Li, CFA, Hong Kong + 852 2533 3583,

  • In China, the inflation rate will be subdued- below 2.5% over 2022-2023; funding costs for toll-road operators will be modest and reined in by policymakers.
  • Inflationary pressures for toll-road operators primarily stem from the sharply increased construction and land acquisition costs, which are not sufficiently offset in tariff increases as the government aims to minimize cost for drivers and businesses.
  • Limited tariff hikes and continued COVID restrictions, together with heavy network expansion, will continue to strain cash flows and raise debt levels of rated toll-road operators.

40. China Infrastructure REITs Inch Toward The Fast Lane, Nov. 28, 2022

Kendrew Fung, Hong Kong, +852 2533 3540,

  • Investment trends are differentiating by sectors and regions under the "effectiveness" urged by policymakers for new infrastructure spending.
  • Access to infrastructure REITs listing is likely to remain highly policy-driven, with originators dominated by state-owned enterprises (SOEs) and underlying assets focused on policy-favored sectors.
  • Monetization of infrastructure assets through REITs could remain challenging for less developed regions, despite their greater needs for capital due to standards of asset quality and expected returns.
  • Regulations and incentives would need to advance further, in our view, to attract a larger variety of investments. Originators could shun REITs due to leverage. Regulatory guidance on the use of REITs proceeds remains vague.
  • The market will take time to grow from the current early stage where market capitalization is limited relative to China's large infrastructure corporate listings. But it holds large promise, giving the size of China's infrastructure sector.

41. China's LGFV Land Grab: Things That Can't Last Won't, Nov. 14, 2022

Laura C Li, CFA, Hong Kong + 852 2533 3583,

  • Land purchases by China's local government financing vehicles (LGFVs) may have inflated government revenues, raising moral hazard risk.
  • The trend could also pile on commercial and financial risk for LGFVs, if land prices and genuine demand do not recover soon.
  • Given such unsustainability and recent regulatory warnings, we expect the recent upswing in LGFV land purchases will be short-lived.

42. EMEA Utilities | Regulation And High Prices Offset Affordability And Dividend Risks, Nov. 14, 2022

Emmanuel Dubois-Pelerin, Paris, + 33 14 420 6673,

  • Inflation will improve remuneration of regulated businesses in the long term, while the main performance determinant for unregulated activities remains high power prices; but inflation-linked debt may strain credit metrics due to the timing of inflation pass through.
  • In the short term, inflation reduces rating headroom for unregulated utilities amid cost increases until benefits from higher power prices kick in; regulated utilities can pass such costs through to end users in most supportive regulations.
  • As long-term yields outpace inflation, they should lighten utility companies' pension and asset-retirement burdens, although the credit impact depends on financial policy.

43. European Rail Looks To Ride The Energy Transition, Nov. 28, 2022

Gonzalo Cantabrana Fernandez, Madrid, +349 1389 6955,

  • Rail's lower greenhouse gas emissions compared with other forms of transportation positions the sector well to benefit from the energy transition and European countries' efforts to lower dependence on fossil fuels. In many countries, the increased use of the railway network plays a key role in reaching climate transition goals.
  • Completely electrifying the European railway networks by 2030 might not be feasible in most European countries, so alternatives such as hydrogen- or battery-powered vehicles on non-electrified sections, coupled with usage of less polluting fuels, will take on added importance.
  • European governments are supporting the sector but will need to balance between prioritizing the development of high-speed railway, regional transportation, and freight transportation.
  • How governments plan the energy transition will require an adjustment on how they manage their railway companies, in particular how they fund them.

44. Latin America: Inflation Pass-Through Poses Greater Challenges For Toll Roads And Mass Transit Than For Utilities, Airports, And Ports, Nov. 22, 2022

Julyana Yokota, Sao Paulo, +55 11 3097 9731,

  • Latin American toll-road operators are sensitive to protests against steep tariff increases.
  • Apart from Argentina, regulatory framework for utilities are generally supportive across the region, but some utilities in Chile and Mexico won't receive higher tariffs to cover costlier expenses.
  • Toll-road operators across the region have a high share of floating debt, which could raise risks, given the time lag of cost pass-throughs amid likely persistence of high interest rates in 2023.

45. N.A. Transport Infra | Essentiality Outweighs Affordability As Counterparty Risks Loom, Nov. 29, 2022

Dhaval R Shah, Toronto, +1-416-507-3272,

  • Transportation infrastructure assets in North America have generally been resilient to the COVID-19 pandemic given their essential nature and high operating margins.
  • Project financings with construction risks could suffer from delays, stemming from labor shortages (which also fuel inflation) and cost input increases, which may undermine the profitability of the underlying construction contract and thus the creditworthiness of subcontractors and contractors.
  • Persistent high inflation accelerates a shift in risk sharing, with counterparties less willing to take on fixed-price risks, resulting in potentially higher risks for projects unless more risks are retained by the public sector, particularly during the construction period.

46. North American Power & Utilities: Inflation Could Create Some Pressure For Utilities, Nov. 28, 2022

Gabe Grosberg, New York, +1 212 4380 6043,

  • Prolonged inflation could modestly weaken the utility industry's financial performance.
  • Unregulated power producers will benefit from the near-term doubling of power prices offsetting a rise in capital expenditure due to inflation.
  • Inflation is pushing up renewable project spending by 20%-30%, affecting some projects and developers.

47. EMEA Insurance Outlook 2023: In The Midst Of The Perfect Storm, Nov. 15, 2022

Gerrit W Jepsen, CFA, New York, + 1 (212) 438 2529,

  • Capital market volatility, recessionary risks, and heightened inflation pose a risk to EMEA insurers, while rising interest rates support investment income.
  • Earnings year to date have displayed mark-to-market investment revaluations disproportionally impacted by reported IFRS 4 shareholder equity and investment impairments.
  • In most EMEA markets, non-life premium rate increases are attempting to match rises in inflation rates.
Oil and gas

48. China Gas Sector Easing Into Lower Demand, Nov. 21, 2022

Congyun Zhou, Singapore, + 852 25333576,

  • Increased imports of piped natural gas and long-term contract liquefied natural gas will position China to meet moderating demand.
  • Distributors will likely benefit from declining gas costs in 2023, reflecting the trajectory in oil prices and lower reliance on spot purchases.
  • Recovery in distributors' earnings will rest on increasing volumes and the ability to pass on costs following a tough 2022.

49. S&P Global Ratings Revises Its Oil And Gas Price Assumptions On Supply/Demand Fundamentals, Nov. 19, 2022

Thomas A Watters, New York, + 1 (212) 438 7818,

  • Global oil prices have recently declined largely due to demand-related concerns about recessions and the persistent lockdowns in China due to COVID-19. Nevertheless, oil prices remain supported by many factors, largely on the supply side of the equation. We also believe price volatility will continue, as markets focus on opposing factors and especially as the EU embargoes on Russian seaborne crude oil (Dec. 5, 2022) and products (Feb. 5, 2023) become effective.
  • Globally, we expect supply and demand to be broadly balanced in 2023 and into 2024, with Organization for Economic Cooperation and Development commercial crude inventory levels remaining at or near the low end of the five-year averages. Demand and refinery utilization rates are getting close to pre-COVID-19 levels.
Public finance

50. China Local Governments: Fiscal Expansion To Continue To Support Growth, Nov. 28, 2022

Jocelyn Huang, Hong Kong, (852) 2532-8079,

  • Economic headwinds and a correction in the property sector will continue to squeeze the credit profiles of Chinese local governments.
  • Fiscal expansion will continue, with weak revenue growth momentum and large spending. We expect local governments' deficits will remain large; we doubt they will return to pre-COVID levels in the next 12 months.
  • The central government's measures to curb risk will constrain highly indebted cities from spending and borrowing through their own bond issuances or other state-owned enterprises' debts.

51. French LRGs: Tighter Budgets Will Squeeze Capital Spending, Nov. 22, 2022

Hugo Soubrier, Paris, +33 1 40 75 25 79,

  • France's central government expects local and regional governments (LRGs) to show an aggregate surplus of 0.5% of GDP by 2027, up from break even in 2022, to contribute to general budget cuts.
  • A proposed freeze to the LRGs' main central government transfer, coupled with a slowing economy and rising costs (especially payroll and energy) means LRGs will need to trim spending.
  • Increased proceeds from the value added tax have offset some operating balance pressures, while LRG liquidity remains robust, and we expect capital expenditure (capex) will recede, meaning we don't expect the funding and budgetary changes will alter our view of French LRGs credit worthiness.

52. Inflation Bolsters German States’ Resilience To Recession, Nov. 10, 2022

Michael Stroschein, Frankfurt, + 49 693 399 9251,

  • German states' strong 2022 budgetary performance gives them solid footing to face the weaker macroeconomic conditions we expect for 2023-2024.
  • We believe elevated inflation will remain a key support to states' budgetary performance over the next few months, since it will boost nominal tax revenue more and ahead of expenditures.
  • This, combined with our expectation that debt-brake rules will resume and impose discipline on fiscal decisions in the medium term, provides resilience to our ratings on German states.
  • Under a significantly more stressed economic scenario, we anticipate weaker budgetary performance and a moderately higher debt burden for German states, but that most of our ratings on the country's states have capacity to absorb such developments.

53. Local And Regional Governments Outlook 2023: Rougher Seas Ahead, Nov. 30, 2022

Felix Ejgel, London, + 44 20 7176 6780,

  • Local and regional governments (LRGs) outside the U.S. are proving resilient amid weaker economic growth and elevated inflation, with nominal revenue increases outstripping rising expenses in 2022.
  • However, higher interest rates, wage hikes, and elevated energy prices, will have to be absorbed by LRGs, notably because central governments' financial capacity to support them, particularly in Europe and Latin America, was depleted during the pandemic.
  • If economic and financial conditions prove worse than expected, authorities will need to choose between short-term financial sustainability and long-term growth.

54. Mexican Municipalities' Opportunities To Strengthen Credit Quality After Mayoral Reelection Remain Limited, Nov. 23, 2022

Karla Gonzalez, Mexico City, + 52 55 5081 4479,

  • Although mayoral reelections in Mexico present an opportunity to overcome challenges stemming from political transitions and short-term financial planning, so far they haven't resulted in generalized improved credit quality among our rated entities.
  • In our view, the institutional framework and a highly politicized environment prevent systemwide improvements in fiscal sustainability, government accountability, and financial transparency among Mexican municipalities.
  • Recent positive rating actions on some municipalities following reelection of their mayors primarily reflected improvements in medium-term financial planning and implementation.

55. Inflation To Erode The Performance Of U.K. Public Finance Sectors, Nov. 29, 2022

Noa Fux, London, 44 2071 760730,

  • We think measures announced in the U.K. government's Autumn Statement 2022 will lead to weaker performances of the country's public finance sectors.
  • This reflects our expectation that revenue streams will grow slower than inflation, while pressures on cost bases will intensify.
  • We expect the impact on our rated portfolio to be limited, however, as our baseline scenarios largely reflect these developments.

56. Advancing Or Adapting: The State Of Play In U.S. Higher Education, Nov. 29, 2022

Gauri Gupta, Chicago, + 1 (312) 233 7010,

  • More than 50% of rated U.S. colleges and universities continued to see a drop in total full-time equivalent enrollment in fall 2021; however, this is slightly improved from about two-thirds in fall 2020.
  • Average total full-time equivalent enrollment is still below fall 2019's level, although only modestly, by approximately 1%, indicating pressure still looms.
  • On average, tuition increased by 2.5% across rated public and private universities, although inflationary pressure continues to constrain budgets; early indications show higher tuition increases in fall 2022.

57. U.S. Not-For-Profit Cultural Institutions’ Credit Quality Held Steady During The Pandemic, Nov. 29, 2022

Nicholas K Fortin, Boston, + 1 (312) 914 9629,

  • Despite our initial rating actions following the onset of the pandemic, long-term credit quality held steady for U.S. cultural institutions.
  • The majority of rated cultural institutions successfully offset lost or reduced revenue with expense cuts, federal support, additional fundraising, or a combination of methods.
  • Balance sheets for cultural institutions improved in fiscal 2021 as a result of strong investment gains, although headwinds could be in store for fiscal 2022 and beyond given market volatility, inflationary pressures, and uncertainty around tourism.

58. U.S. Transportation Infrastructure Toll Sector Update And Medians: Rebounding Traffic And Toll Increases Are Key Ingredients For Credit Strength And Stability, Nov. 18, 2022

Kurt E Forsgren, Boston, + 1 (617) 530 8308,

  • We expect U.S. not-for-profit toll road ratings, which were among the most resilient of the transportation infrastructure asset classes, with no downgrades throughout the COVID-19 pandemic, will be stable given the almost complete rebound in traffic during 2022 supported by continued commercial vehicle traffic and toll rate increases implemented by many operators.
  • The recovery in traffic and revenues is expected to be accompanied by increased operations and maintenance expenses and a return to capital program spending to expand capacity and continue the conversion to all-electronic toll collection, which accelerated in 2020-2021.
  • Toll increases implemented since January 2020 buoyed the credit quality of toll road and bridge operators. Of the 15 largest U.S. toll-backed issuers as measured by debt outstanding, 12 raised toll rates, which in some instances compensated for weaker passenger vehicle traffic. Across the rated universe, the median decline in 2020 operating revenues was approximately 5% less than the decline in transactions.
  • A weakening economic outlook could cool the impacts of construction cost inflation and supply chain pressures on capital projects, although the massive federal investment in infrastructure could keep input and labor prices elevated in many markets over the medium term.
  • Our analysis of S&P Global Ratings' universe of rated toll road and bridge fiscal 2021 financial metrics--including debt service coverage, debt to EBIDA, and liquidity--shows relatively stable performance with median revenues and toll transaction growth of about 6%, resulting in median debt service coverage of 1.6x in 2021 compared with 1.7x in 2020 and 1.9x in 2019.

59. U.S. Social Housing Providers: Unprecedented Federal Pandemic Support And Beyond, Nov. 17, 2022

Ki Beom K Park, San Francisco, + 1 (212) 438 8493,

  • Credit stability has been consistent among all U.S. social housing providers (SHPs) mainly due to unprecedented federal response to the pandemic.
  • Inflation and rising interest rates, supply-chain issues, labor shortage, and weaker economic prospects are contributing operational challenges and major delays to current development pipelines
  • Despite these potential headwinds, we expect ratings to remain stable, with most issuers maintaining a strong enterprise risk profile and solid liquidity position.
  • As downside risks remain substantial, SHPs' strategic competence, operational effectiveness, and ability to manage risks are keys to maintain stable credit quality.

60. Florida And South Carolina Local Governments' Credit Quality Remains Sound Despite Damage From Hurricane Ian, Nov. 11, 2022

Jennifer K Garza (Mann), Dallas, + 1(214) 871 422,

  • We have surveyed and analyzed 21 local government issuers in Florida and South Carolina that were in the path of Hurricane Ian.
  • For most, costs from storm-related damage were minimal.
  • We believe credit quality for all 21 issuers remains consistent and is supported by very strong financial profiles and disaster recovery planning initiatives.

61. Market Insights Sector Intelligence | U.S. Public Finance, Nov. 10, 2022

Eden Perry, New York, + 1 (212) 438 0613,

  • There have been over 1,700 rating actions in U.S. public finance (USPF) since the beginning of the year.
  • Upgrades and favorable rating actions continued to outpace unfavorable activity in 2022 across most USPF sectors, with the exception of health care and housing
Real estate

62. China Property Is Heading For A Transformation, And Maybe A Turnaround, Nov. 21, 2022

Ricky Tsang, Hong Kong, (852) 2533-3575,

  • China property sales will drop 26%-28% in 2022, and a further 5%-8% in 2023, as highly leveraged private developers continue to struggle.
  • A batch of recent government measures will set a floor to the crisis, rebuilding confidence in the sector. These steps will add about Chinese renminbi 1 trillion of fresh liquidity, stopping the downward spiral of developers of higher credit quality.
  • The rising dominance of state-owned developers means the market will be slower moving with less offshore issuance; it will also be more stable with more focus on completing unfinished homes.

63. Southeast Asia Property Update: Cautious Growth Ahead, Nov. 21, 2022

Simon Wong, Singapore, +65 65396336,

  • Muted sales momentum in Indonesia expected ahead as consumer sentiments weaken.
  • Credit quality of Indonesia developers is constrained by soft residential sales and refinancing risk.
  • In Singapore, commercial real estate should stay resilient, underpinned by manageable supply and healthy demand.
Structured finance

64. China Securitization Performance Watch 3Q 2022: Sectors' Performance Diverging On Lockdowns, Market Volatility, Nov. 11, 2022

Yilin Lou, Hong Kong, +852 2533 3524,

  • New securitization issuance dropped by around a third year on year in the first nine months of 2022.
  • Issuance of residential mortgage-backed securities (RMBS) remained stalled, while securitization of auto loans also slowed in the third quarter.
  • The asset performance of auto-loan asset-backed securities (ABS), RMBS, and credit card ABS that we rate broadly remained low and stable in terms of early delinquencies.
  • The early delinquency ratio of certain consumer loan ABS transactions backed by unsecured credit assets apparently deteriorated in the past two quarters.

65. Danish Covered Bond Market Insights 2022, Nov. 22, 2022

Casper R Andersen, Frankfurt, + 49 69 33 999 208,

  • High household wealth and a solid public finance position should enable the Danish economy to withstand inflationary pressures and expected declining house prices.
  • Higher housing costs are driving demand in the interest-only product. Upcoming refinancing of adjustable rate mortgage loans risk large rate increases, which could hamper credit performance.
  • Following a significant uptick during the COVID-19 pandemic fueled by low interest rates and high demand, house price growth has slowed down. We expect that further rises in interest rates will put further downward pressure on house prices in the coming years.

66. EMEA Structured Finance Chartbook, Nov. 22, 2022

Andrew South, United Kingdom, + 44 20 7176 3712, +44 (7811) 744597

  • Credit Cycle Indicator- Global corporates and households are in the midst of a major credit correction, according to S&P Global Ratings' Credit Cycle Indicator (CCI), a forward-looking signal on credit stress. Following a period of very loose credit conditions and debt buildup, the cycle turned sharply in early 2021 (see chart below). Inflation, rising interest rates, and softening GDP growth in major economies have all had an effect. The indicator suggests that the current downcycle will be felt well into 2023.
  • Issuance-Investor-placed securitization issuance for October 2022 was €4.4 billion--only about a quarter of the volume in October 2021. 2 This means that overall issuance for the first 10 months of the year--at €74 billion--was down 25% compared with 2021. By contrast, European benchmark covered bond issuance has been strong this year, reaching €146 billion so far--comfortably more than double the volume recorded in the first 10 months of 2021.
  • Rating actions. In October 2022, we raised 14 of our ratings on European securitization tranches, mostly in the CLO and buy-to let RMBS sectors. There were only four downgrades, in CMBS and CLOs.

67. European Auto ABS Appear Resilient To A Potential Fall In Used Car Prices, Nov. 29, 2022

Roberto Amato, Frankfurt, + 49 69 3399 9161,

  • Although European used car prices have risen significantly since 2020, the market could be entering a new phase, with new car registrations rising and used car sales slowing.
  • While we do not expect used car prices to fall dramatically, we conducted a scenario analysis to assess the potential impact of changing market dynamics on our European auto ABS ratings. The results suggest a minimal ratings impact if used car prices return to pre-pandemic levels.
  • Our scenario analysis also shows that our ratings on European auto ABS transactions would remain relatively stable if used car prices were to drop below pre-pandemic levels.

68. U.K. Buy-To-Let RMBS: Sheltered But Not Immune To Rate Rises, Nov. 24, 2022

Arnaud Checconi, United Kingdom, +44-20-7176-3410,

  • U.K. consumer prices are rising at a rate not seen in decades, pushing policy and mortgage rates to multi-year highs.
  • For a sample of 107,439 loans backing U.K. buy-to-let (BTL) residential mortgage-backed securities (RMBS) transactions that we rate, we simulated the effects of 300 basis points (bps; moderate scenario) and 500 bps (severe scenario) increases in mortgage rates on monthly payments and debt service coverage ratios (DSCRs).
  • One-third of the loans in our sample remain on a fixed rate until at least the end of forecast horizon in June 2023, so we see no impact on monthly payments.
  • Overall, however, the average mortgage payment rises to £913 from £600 in our moderate rate rise scenario, and to £1,115 in our severe rate rise scenario. Nearly all the BTL loans in our sample are interest-only, making them more sensitive to rate rises.

69. Rising Rates Amid Looming Balloon Dates: Performance Update And Scenario Analysis For Lodging-Backed CMBS, Nov. 16, 2022

Natalka H Chevance, New York, + 1 (212) 438 1236,

  • U.S. lodging performance has rebounded strongly as the effects of the COVID-19 pandemic fade, with overall RevPAR now comfortably exceeding 2019 levels.
  • Both conduit and SASB percentage exposures to lodging have increased year over year in 2022; however, the gains may be short-lived given the recent sharp increases in benchmark rates and spreads, and transaction closing costs.
  • Loans backing CMBS that were originated before the Federal Reserve's series of rate hikes this year will face a more challenging refinancing environment. For perspective, we explore a sample of our rated book with maturity dates during the next five years, vary the interest rate, and calculate the paydown necessary to achieve a 1.5x debt service coverage.
  • While debt service coverage has fallen for most transactions since issuance, a reversion to net cash flow levels at issuance over the next one to two years in light of the sector's strong performance will boost and/or stabilize that metric despite the increase in rates.

70. Technology And Geopolitics: What If The Semiconductor Industry Bifurcates?, Nov. 14, 2022

Terry E Chan, CFA, Melbourne, + 61 3 9631 2174,

  • The adversarial relationship between the U.S. and China raises the specter of a bifurcation of the global semiconductor industry.
  • Such a division would be costly, considering the bill for building just one foundry can rack up to tens of billions of dollars, and take up to a decade to complete.
  • This development, in our view, raises quality, reliability and cost risks all along the supply chain.

71. Winter Is Coming For U.S. Tech, Nov. 16, 2022

Christian Frank, San Francisco, + 1 (415) 371 5069,

  • Fourth-quarter guidance from U.S. tech companies suggests macroeconomic weakness is spreading beyond consumer and PC markets, and inventory corrections are intensifying.
  • China lockdowns are weighing on demand across all end markets and bringing fresh supply disruptions.
  • U.S. export controls target China's advanced semiconductor industry.
  • Downgrade risk is increasing among the non-investment-grade U.S. tech companies we rate due to the weakening macroeconomic environment and rising interest rates.

72. Europe's Remarkable Air Passenger Traffic Recovery Faces A Trickier 2023, Nov. 21, 2022

Rachel J Gerrish, London, + 44 20 7176 6680,

  • The crucial summer rebound in European airline passenger traffic was stronger than we expected despite well-publicised operational issues.
  • However, the industry faces mounting macroeconomic challenges in 2023 as cost inflation escalates, interest rates rise, and disposable incomes come under pressure. Furthermore, if the conflict in Ukraine escalates and/or new COVID-19 variants emerge, this could discourage people from traveling.
  • We believe that European traffic for full-year 2022 will be 75%-80% of 2019 levels. We think traffic will remain around, or only slightly above, this range in 2023 before returning closer to pre-pandemic levels in 2024.

We regularly host webinars to provide current data, perspectives, and analysis on the sectors, events, and trends that shape the global market. To register for the upcoming webinars, please click here.

The Ratings View:

We are also publishing The Ratings View, which spotlights key developments and asset class trends on a weekly basis. See the latest published Nov. 23 here.

This Week In Credit:

Our data-driven research snapshot that provides forward-looking, actionable insights on weekly market-moving credit trends can be accessed here.

This report does not constitute a rating action.

Primary Credit Analyst:David C Tesher, New York + 212-438-2618;
Secondary Contacts:Eunice Tan, Hong Kong + 852 2533 3553;
Jose M Perez-Gorozpe, Mexico City (52) 55-5081-4442;
Paul Watters, CFA, London (44) 20-7176-3542;
Joe M Maguire, New York (1) 212-438-7507;
Yucheng Zheng, New York + 1 (212) 438 4436;
Research Contributor:Vaishali Singh, CRISIL Global Analytical Center, an S&P affiliate, Mumbai

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