Wednesday, 8th April 2020
Credit risk hasn’t peaked yet
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The financial turmoil and economic lockdown triggered by Covid-19 takes its toll on companies across the globe. In the past three weeks a total of 152 issuers in the Scorable universe were downgraded – with 84% of these rating actions accurately predicted by our system. One might think that credit risk has peaked but our analysis paints a different picture. In fact, nearly half (48%) of the issuers in the Scorable universe are still at a significant risk of a rating downgrade. 

The majority of rating downgrades has so far affected North American companies, which is reflected in a slight drop in issuers from this region in SRD-classes 4 and 5. For Europe and APAC, the number of issuers in our riskiest credit segment has risen further this week. Corporate credit risk will remain elevated across the globe for the foreseeable future as companies face continued disruption from Covid-19, a bleak economic outlook and ongoing market volatility. We will likely see another wave of rating downgrades – and defaults – in the coming weeks and months.