S&P expects the 12-month default rate of speculative-grade European corporates to reach 3% by June 2023, from 1.1% in June 2022. In this baseline forecast, 24 speculative-grade companies would default in a context of slowing economic growth, rising interest rates and falling profit margins. This is what emerges from a report by S&P Global Ratings, according to which the probabilities of recession are increasing for Europe (not as much as the United States risks), particularly in the wake of Russia’s invasion of Ukraine. and associated inflationary pressures, largely linked to energy.
“Firms remain relatively solid and therefore able to withstand a slight downturn, but if a prolonged or deep recession occurs, defaults are expected to further increase, with a default rate of 5% by June 2023, in its scenario. pessimistic, ”they note from S&P, adding that interest rates remain low in Europe, but are rising, while consumer confidence and high energy prices remain a risk, especially in view of the winter.