Moody's outlines that credit outlook for non-financial companies is deteriorating

According to Monday’s announcement made by Moody's, an international rating agency, credit conditions for non-financial companies in Europe, Africa, and Middle East might deteriorate significantly in the following year. The negative outlook is primarily associated with financing difficulties, driven by rising costs of energy and employees’ wages. 

For the first time since the crisis of 2009 the global economy has gotten so close to recession again. The previous ultra-soft monetary policy has begun to tighten at an incredibly fast pace against the background of record high inflation, thereby putting a lot of economic processes at risk.

Moody’s experts highlight that high interest rates will sooner or later lead to a deterioration of financing conditions, as well as a decrease in the liquidity and quality of credits. These consequences might force companies to focus on money savings at the expense of shareholders' returns and turn to debt-funded mergers and acquisitions (M&A).

The current complex economic situation has also had an impact on people’s purchasing power. It’s expected that demand in many consumer and some industrial sectors might decline substantially in 2023.