LONDON: Higher interest rates in Europe will put pressure on the credit ratings of the region’s companies and banks, S&P Global said on Tuesday.
“The trend in credit quality is turning negative for corporates, especially for speculative-grade issuers, as financing conditions tighten,” the rating firm said in a new report.
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“Real estate remains one of the most exposed sectors. For European banks, while asset quality deterioration will emerge, credit losses are expected to only normalize,” the report added.
S&P forecast that European speculative-grade defaults will increase gradually and reach 3.75% by June 2024 from 3.4% in August.
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