Outlook for North American Corporates Stable

The outlook for North American corporates in 2017 is stable, according to Moody’s Investors Service in a new report on the sector. Factors reflected in the ratings agency’s forecast include modest economic growth and downside risk, as well as ample system liquidity and accessible financial markets.

“Our stable outlook for North American corporates next year reflects an overall accommodative credit environment, with an easing corporate default rate,” Senior Vice President Bill Wolfe said. “But it also belies uncertainties and risks, with credit conditions influenced by a constantly adjusting global economic environment.”

Caution is still warranted, since negative momentum has been in place since mid-2011. Increasing uncertainty is likely to weaken credit conditions in North America next year. Factors influencing prices and terms include event-related risks amid G-20 countries in connection to uncertain policies, low and uneven economic growth in Europe, and an ongoing slowdown in China. The flow of credit, however, is expected to be supported by robust systemic liquidity and positive global growth.

Moody’s industry outlooks are mainly stable, with negative signals contained, though positive indicators are dependent on consumers and therefore fragile. The agency forecasts that U.S. GDP will grow 2.2% in 2017 and 2.1% the following year.

An atmosphere of expansionist monetary policies amid ample liquidity, though low-risk assets are scarce, is a factor in the availability of credit. Confidence and a stronger credit supply will depend on positive economic news, Moody’s said.

– Adam Fusco, editorial associate

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