Consider Credit--Fundamental Ratings Monthly Briefing April 2025

This is the April 2025 edition of "Consider Credit--Fundamental Ratings Monthly Briefing". It includes a Credit Rating Actions Dashboard and a description of our recent and anticipated credit rating considerations across Sovereigns, Financial Institutions, and Corporate Finance.

Credit Rating Considerations include:
-- We are in a situation where global themes continue of slower economic growth, inflation risks, and uncertain business and market reactions to tariffs. For now, there is no clarity on how things will play out in tariff setting and for many in the crosshairs it seems a long time to wait to July or beyond. In this climate, there is significant unpredictability around the impact on global sovereign credit ratings.
-- Across Financial Institution sectors, tariffs and their potential impact on credit quality, inflation, and interest rates, as well as on the overall global economy, remain the largest downside risk to our credit ratings. That said, even with the heightened volatility witnessed in the markets recently, we still expect most of our global financial institutions' credit ratings to demonstrate resilience over the next year.
-- In the broad asset finance sector, the severity of the tariff impact may vary depending on the jurisdiction or the type of assets. Civil and social infrastructure projects under construction are expected to be directly affected as we believe higher tariffs will increase the costs for U.S. contractors who rely on materials sourced from overseas.

This month's features include:
-- Rohini Malkani, Senior Vice President, Global Sovereign Ratings, "While China`s economy began the year well, the momentum is expected to slow due to escalating trade tensions." See page 4 for more content.
-- "In our opinion, corporate and asset finance sectors with both a high direct and indirect tariff impact include automotive/automotive suppliers, capital goods, railways and trucking and retailers and consumer discretionary products," said Victor Vallance, Managing Director, Corporate Ratings. "Sectors with mostly a high direct impact include infrastructure under construction (medium indirect) and with mostly a high indirect impact (low direct), airlines." See page 5 for more detail.
-- "While the banks in our coverage universe are generally well diversified without any outsized exposures to sectors that tariffs would most affect, a rapidly deteriorating macro environment, especially if it leads to job losses, could result in significant earnings pressure," said Michael Driscoll, Credit Rating Officer, Global Financial Institutions. See page 6 for more commentary in the section on global banks and tariffs.

Catch up on these topics and more thought leadership from across the Fundamental Ratings teams and around the globe in this month's edition.