The Truth About the 2016 Credit Outlook: A Mid-Year Update
With mounting concerns about global volatility, low interest rates, and high corporate debt levels, it’s never been more important for credit and other financial professionals to be alert to new risks on the horizon.
2016 started with plenty of economic anxiety, and global financial stress may get worse before it gets better. Our Mid-2016 Credit Risk Report helps you make sense of current trends and better manage the financial risks ahead.
Here are some of the trends highlighted in the report:
- 2016 got off to a rocky start. Estimates put U.S. GDP growth under 2%, and growth in key global markets has slowed. According to credit experts, we are nearing the end of a benign credit cycle -- high liquidity, high recovery rates and low defaults. And while oil prices have bounced back from a 12-year low, many financial risk indicators are still creeping up.
- We’re facing uncertainty on a global scale. After almost 25 years of double-digit growth, China’s growth has slowed to under 6%, increasing financial stress across the globe, from the EU and Japan to emerging markets. Central banks continue to push monetary stimulus, but without effect.
- Credit risk is on the rise. Seven years of near-zero interest rates have encouraged companies to take on record levels of debt, even as the decline in credit quality limits their access to future financing. Many signs point to growing credit risk, from increasing credit spreads to an alarming ratio of overall debt to GDP.
- Corporate bankruptcies are at a 7-year high. A sobering snapshot of all public companies in the United States shows an 80% increase in the risk of public company failure since the start of the Great Recession. And, of course, credit risk isn’t uniformly distributed, with pockets of higher risk in key industries. Oil and gas is the poster child, but many others are troubled, too.
- Key strategies will help you manage the risks ahead. Which strategies will help you identify customer and supplier distress early? Better use of data, predictive tools, proactive partnerships, efficient processes and more gets it done.
Read this mid-year report to learn why it’s time to target risk and reduce exposure now, before customers and suppliers experience even greater financial stress.
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