Credit Conditions throughout the World Are on the Upswing

Credit conditions for the various industry sectors that Moody’s Investors Service tracks are at their best condition since the Great Recession. A majority of industry sector outlooks covering the next 12 to 18 months are either stable or positive.

"Our assessment of solid credit conditions is bolstered by the median EBITDA growth forecast of Moody's global ISOs, which, as of September 30, had decisively increased to 4.3% after two quarters at 4.0%, and nearly three years at about 3.5%," said Bill Wolfe, a Moody's senior vice president. "Accordingly, the aggregate and these signals, along with those from other proprietary indicators, our macroeconomic assessment, and market parameters, prompted us to change our North American ISO to positive from stable."

Outside of North America, credit conditions are expanding as well in the Euro area, China and most emerging economies, as economic fundamentals appear in better shape than they have been at any time since the end of the last decade, Moody’s said. A large amount of room to grow in Europe and some emerging markets means the current rate of growth looks sustainable.

“Moderating monetary stimulus likewise indicates that credit conditions today are solid, and Moody's analysts anticipate global monetary policy to remain relatively accommodating, gradually normalizing as economic conditions improve. If managed or received poorly, however, reduced stimulus could threaten economic growth and credit conditions. The challenge, then, will be to change course without disrupting the financial markets, or transmitting any disruption to the real economy.”

– Nicholas Stern, managing editor

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