Global Credit Outlook 2024
Looking ahead at 2024, some of the same challenges remain and other risks are emerging—all of which require a new playbook for issuers and investors in the debt markets.
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- IN THIS REPORT
- IN THIS REPORT
- Key Takeaways
- Top Global Risks
- Economic Outlook
- Questions That Matter
- Regional Credit Conditions
An environment of increasingly rapid change, which began with the onset of the global COVID-19 pandemic, requires financial market participants to adapt their playbooks. Conditions that borrowers and investors could safely take for granted for a decade or more have been pushed aside. Most importantly, perhaps, is that markets can no longer expect ultra-accommodative monetary policy and low inflation will be the norm.
While still-robust employment levels and supportive fiscal conditions should continue to underpin the resilience of stronger credits, we expect 2024 to come with additional credit deterioration and defaults for more vulnerable corporate and government issuers.
Borrowers across all asset classes will need to adjust to tighter financing conditions and softer economic growth. While long-term yields will likely peak around midyear, financing conditions will likely stay tight in real terms in 2024. Borrowers have reduced near-term maturities, but the share of speculative-grade debt coming due rises significantly in 2025, making 2024 a pivotal year. Defaults will likely rise further, to 5% in the U.S. and 3.75% in Europe, above their long-term historical trends. We expect additional credit deterioration in 2024, largely at the lower end of the ratings scale, where close to 40% of credits are at risk of downgrades. Sectors exposed to a decline in consumer spending are most vulnerable. Meanwhile, investment-grade credits should generally continue to show resilience despite some margin compression—with the exception of the real estate sector. The main risks that could derail our baseline expectations, leading to further credit deterioration, include persistent tight financing conditions amid entrenched inflation; a sharper-than-expected slowdown in global growth; elevated input-cost inflation and high energy prices that squeeze corporate profits and pressure governments’ fiscal balances; vulnerable commercial real estate; and amplifying geopolitical tensions. Looking ahead, heightened geopolitical risks, the need to accelerate the decarbonization of the economy to address the rise in climate-related risks, and the technology revolution will increasingly shape the future of credit.
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Access All Outlooks
Go deeper into all of our outlooks for what promises to be another challenging period for the global economy and markets.
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Economic Outlook
What We're Watching
S&P Global Ratings expects additional credit deterioration in 2024, largely at the lower end of the ratings scale. An environment of increasingly rapid change requires financial market participants to adapt their playbooks.
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Questions That Matter
Aligned with our Top Global Risks, we answer the pressing Questions That Matter for 2024 on the uncertainties that will shape the coming year, collected through our interactions with investors and other market participants.
Credit Headwinds
Credit HeadwindsWe are back to an environment of higher real interest rates, concluding an era of cheap money that started in the wake of the Great Financial Crisis. Borrowers across all asset classes will need to adjust to tighter financing conditions and softer economic growth. With a durably higher cost of debt, a ramp-up in maturities, and slowing economic activity in the cards for 2024, the focus comes back to credit fundamentals and liquidity analysis.
- December 4, 2023Could Interest Rate And Recession Risks Derail Corporate Credit?Corporates
- December 4, 2023Is The Worst Over For The Global Office Sector And China’s Residential Market?Real Estate
Capital Flows
Capital FlowsWith the era of easy money over, investors are rebalancing their portfolios to adjust for shifting risks and returns. Borrowers (especially those at the lower end of the ratings ladder facing tighter access to credit) will need to adapt to the reshuffling of capital flows from long-duration speculative assets to safer havens—as well as adapt to the knock-on implications for overall market liquidity, foreign exchange reserves, and investment in emerging markets.
- December 4, 2023How Long Can The Golden Age Of Private Credit Last?Private Markets
- December 4, 2023How Will The Path Of Interest Rates In 2024 Affect Corporate Borrowing Strategies?Market Dynamics
GeopoliticalUncertainty
GeopoliticalUncertaintyGeopolitical risks have returned to center stage, with the war between Israel and Hamas, the prolonged Russia-Ukraine conflict, and ongoing U.S.-China tensions. This increased geopolitical fragmentation affects corporates and governments in their strategies for supply chain and energy security, with potential broader implications on food prices, global trade, and inflation—while increasing the potential for event risk.
- December 4, 2023What Are The Credit Implications Of Intensifying Conflicts And Political Disruption?Sovereigns
- December 4, 2023Which EMs Are Better Positioned To Outperform In 2024?Emerging Markets
Energy & Climate Resilience
Energy & Climate ResilienceNew challenges are also emerging from the necessity to accelerate the world’s transition to a low-carbon economy to limit the potential dramatic consequences of climate change. Extreme weather conditions and worsening physical risks continue to increase and influence credit fundamentals. However, we believe companies' and governments' readiness to address these risks, in large part, remains low and could become even more challenging to overcome in an environment of slower growth and tighter financing conditions.
- December 4, 2023How Will Challenging Credit Conditions Affect Resiliency And Adaptation To More Costly Climate Hazards In 2024?Physical Climate Risk
- December 4, 2023Can The Shift To Net Zero Accelerate Amid Growing Headwinds?Energy Transition
Crypto, Cyber, & Tech Disruption
Crypto, Cyber, & Tech DisruptionThe transformation of global and regional financial systems amid the adoption of new technologies—from generative artificial intelligence to blockchain and beyond—is accelerating an era of growth and discovery while also heightening single-entity and systemic cyber risk, forcing corporate and government entities to adapt their playbooks.
- December 4, 2023What Are The Key Credit Risks And Opportunities Of AI?Artificial Intelligence
- December 4, 2023Will Technological And Regulatory Developments Unleash Institutional Blockchain Adoption?Digital Assets
Webinar Replay: Global Credit Outlook 2024—New Risks, New Playbook
S&P Global Ratings’ Global Credit Outlook 2024 presented our macroeconomic and credit outlooks for the year ahead, including our base-case forecasts, assumptions, and key risks for what promises to be another challenging period for the global economy and markets.
Regional Credit Conditions
S&P Global Ratings’ Global Credit Outlook 2024 harnesses the power of our regional and global Credit Conditions Committees (CCC), which meet quarterly to review conditions in Asia-Pacific, Emerging Markets, Europe, and North America, cascading into our global coverage. At the CCCs, our senior researchers, economists, and analysts from around the world evaluate the trends affecting the current and future states of economies, industries, and credit markets—to identify the base case and downside scenarios and rank the exogenous risks that underpin our credit ratings and inform potential rating impacts across various asset classes.
- Credit Conditions North America Q1 2024: A Cluster Of Stresses
- Credit Conditions Europe Q1 2024: Adapting To New Realities
- Credit Conditions Asia-Pacific Q1 2024: China Slows, India Grows
- Credit Conditions Emerging Markets Q1 2024: Not Getting Easier
Webinar Replay: New Risks, New Playbook—Questions That Matter
S&P Global Ratings answered the pressing questions that matter on the uncertainties that will shape 2024—collected through our interactions with investors and other market participants.
