Credit Conditions
Our regional and global Credit Conditions Committees—and the research publications we produce—provide financial market participants around the world with an essential resource for identifying and understanding prevailing and potential credit risks.
Assessing Global Macro-Credit Risks
As an assessment of the external operating environment, our regional and global Credit Conditions Committee forums—covering Asia-Pacific, Emerging Markets, Europe, and North America, which cascade into our global coverage—form an integral part of S&P Global Ratings’ credit rating analysis.
At the CCCs, our senior researchers, economists, and analysts (covering corporates, financial institutions, insurance, structured finance, sovereigns, and U.S. public finance) meet each quarter to evaluate the trends affecting the current and future states of economies, industries, and credit markets. The CCCs identify base case and downside scenarios, and rank exogenous risks. These views are cascaded to our analytical teams to inform their rating deliberations.
Our quarterly and special CCC reports crystallize the Committees’ conclusions, backed by a host of proprietary data, and with an eye toward helping investors make decisions—providing financial market participants around the world with a primary resource for identifying and understanding prevailing and potential credit risks.
Global
Global Credit Conditions Special Update: U.S.-China Tariff De-Escalation Brings Some Temporary Relief
In another twist, the U.S. and China sharply reduced bilateral tariffs on May 12, and enacted a 90-day pause to help facilitate a broad-based agreement. Market reaction was positive, but policy uncertainty remains high. We caution that more progress is needed to return to a semblance of trade policy normalization.
The latest U.S.-China tariff moves are growth positive and, assuming they hold, would raise our GDP growth forecasts closer to our previous March 2025 forecast round. We believe that the global trade environment will continue to weigh on credit conditions and our rating outlook, but tail risks have eased somewhat. The possible impact continues to be uneven across sectors and countries.
S&P Global Ratings is not updating its growth forecasts at this juncture, considering the unpredictability of policy developments, particularly out of the U.S., and our upcoming quarterly forecasting round.
North America
Credit Conditions North America Q3 2025: Still More Clouds Than Clarity
Tariff-related concerns continue to cloud the outlook for North American credit conditions, with the reconciliation bill working its way through Congress adding to uncertainty. U.S. involvement in the Israel-Iran conflict—and the fragility of a ceasefire— heightens the risk that tensions will escalate and disrupt the capital and global energy markets, and economic activity.
The volatility that swept through financial markets in the first months of the Trump administration could return amid heightened geopolitical strife, the approaching end of U.S. tariff pauses, and the fate of the tax and spending bill.
For now, spreads on corporate debt remain narrow—well off the highs reached in the aftermath of the White House’s April 2 announced tariffs.
Europe
Credit Conditions Europe Q3 2025: Credit Rides The Storms
Overall: Facing growing unilateralism and a more geopolitically fractured world feels a toxic brew, especially in Europe. However, with so much in flux on global trade and security the default for governments, businesses, and households has been to hunker down and deal with the day-to-day reality. This has paid dividends as European economic and business performance--and to a lesser extent financial market performance--has proved resilient (so far) to the U.S. trade turmoil and wars in Europe and the Middle East.
Risks: The lack of clarity on how and when trade negotiations with the U.S. will be resolved has implications for growth, supply chains, and corporate financial performance and remains a high risk. Beyond that, several other risks to economic growth persist, including geopolitical tensions (remaining high in the Middle East) that could disrupt the oil market, and uncertainties around the implementation of fiscal plans in Europe.
Ratings: Banks retain a stable outlook based on solid capitalization and good profitability. Within nonfinancial corporates, diverging credit quality performance between investment-grade and speculative-grade issuers is evident, with the greatest vulnerability noted within speculative-grade, tariff-targeted, and energy-intensive sectors.
Asia-Pacific
Credit Conditions Asia-Pacific Q3 2025: An Unsettling Environment
Unsettling conditions: Turbulence around the Middle East situation is complicating the geopolitical landscape. Key transmission channels include higher oil prices and a weaker macro-outlook. These, and an investor flight to quality, could undo benign credit conditions in Asia-Pacific. Despite significant tariff uncertainty, negative rating actions have been limited due to credit resilience of rated issuers and continuing financing access. However, uncertainty lurks underneath.
U.S.-China détente continues: Tariffs will hurt Asia-Pacific growth prospects. Higher export costs will eat into margins, and weaker sentiment will limit spending by businesses and households. Nonetheless, following the pause in China-U.S. tariffs, we have reverted.
Expanding concentric circles of tensions: The volatile Middle East situation and protracted Russia-Ukraine conflict could renew financial market and currency swings. Shifting U.S. policy and rhetoric on trade and foreign affairs may foreshadow long-term changes in the geopolitical landscape. We see the geopolitical risk trend as worsening.
Deepening cracks: The confluence of credit headwinds will test credit fundamentals across borrowers, distinguishing winners from losers. In addition, the complications of unprecedented geopolitical conditions and an evolving operating landscape (from climate change and technological advancements) could push some to crack under pressure.
Emerging Markets
Credit Conditions Emerging Markets Q3 2025: Weak Dollar Cushions Turbulence
Credit conditions holding up: Credit conditions in emerging markets (EMs) have held up better than expected over the last quarter, despite uncertainty about trade policy and its impact on global growth. This is due to tariffs having a smaller impact on growth than many feared and a weaker dollar, which is attracting capital flows to EMs.
Indirect effects of tariffs: In our baseline, we expect credit conditions in EMs to continue to face significant headwinds, especially as the indirect effects of tariffs, namely slower investment and global growth, become more evident.
Significant downside risks: Along with uncertainty about U.S. trade policy, downside risks to our outlook include the implications of a further escalation of the conflict in Iran, rising long-term government yields, and fiscal challenges across several EMs.
Credit Cycle Indicator
Q2 2025: Macro Headwinds Could Hinder Credit Recovery
Our global credit cycle indicator (CCI) continues to signal a credit recovery this year. However, geopolitical and trade tensions, and growth concerns, amid increasing policy uncertainties, could stall or derail the upturn.
The corporate sector, thanks to supportive market conditions, has shown stronger upward credit momentum. Households continue to grapple with squeezed purchasing power and subdued sentiment.
The divergence across regions and geographies remains, suggesting different credit trajectories.
Latest Research
Take a look at all of our latest credit conditions research.