Outlooks Connections Podcast Episode 1
Uneven recovery, rising debt and digital transformation will shape credit in 2021
Anne Van Praagh and Michael Taylor of the Credit Strategy & Research team discuss six key trends that will affect the credit landscape as the world deals with the coronavirus crisis. These include an uneven economic recovery, higher corporate and sovereign debt loads, and the accelerated digital transformation of major business sectors.
Recovery from the unprecedented economic shock of the coronavirus will be tenuous and inconsistent across countries, regions and sectors.
Prospects of an unwinding of extraordinary fiscal support measures will create credit risks; geopolitical and trade tensions, especially between the US and China, will be a top policy focus.
Rising debt burdens
Weak earnings and more solvency concerns will weigh on hard-hit companies and governments; higher debt levels and more relaxed underwriting will erode the positive effects of low interest rates on debt servicing capacity.
Growth of digital service delivery, e-commerce and remote work will accelerate changes in sectors such as retail, healthcare, education, banking and commercial real estate.
The consequences of climate change will require increased adaptation and mitigation efforts, with wide-ranging effects on governments and companies.
Public health and safety issues stemming from the coronavirus, growing inequality, demographic trends and other social challenges will have substantial credit implications.