UBS highlights structural shifts in Europe’s credit ecosystem

UBS experts have analyzed structural shifts in Europe's credit ecosystem, focusing on the potential implementation of a capital markets union. According to their assessment, the EU is at a turning point. However, the unstable global environment, mainly driven by Donald Trump's controversial statements, makes precise forecasting difficult.

Therefore, UBS analysts highlight structural factors, such as the evolving EU corporate lending ecosystem, strong fundamentals, and low default rates on high-yield loans.

UBS data show that European companies receive a much larger share of financing from banks than American ones, about 85% versus 50–55%. However, market participants still underestimate EU assets. UBS expects this to change soon.

The bank’s analysts note that all corporate debt markets are benefitting from tariff de-escalation policies, with the most favorable conditions currently in Europe.

While US tariffs have contributed to an EU economic slowdown, UBS stresses that this has not raised default risks but merely delayed deleveraging.