<\/p>\n
Globally the chemicals, auto and tech sectors are exposed to trade disruptions.<\/p>\n
The fallout from the U.S. trade war will put pressure on corporate revenues and profits, raising credit risks too, particularly for companies with higher leverage, Fitch Ratings says.<\/p>\n
In a new report, the rating agency said that intensified trade conflict \u2014 prompted by the imposition of high, sweeping U.S. tariffs, and retaliatory measures from various markets \u2014 will increase the pressure on corporate balance sheets, and ultimately, credit ratings.<\/p>\n
\u201cThe tariffs will cut revenue growth and profitability for most corporate sectors globally, limiting issuers\u2019 ability to restore their leverage headroom and increasing pressure on ratings,\u201d it said.<\/p>\n
Several global sectors \u2014 including the automotive, technology hardware and chemicals industries \u2014 will be hit particularly hard by tariffs, \u201cdue to international exposure, significant cross-market trade activity or intricate supply chains,\u201d it said.<\/p>\n
Among these sectors, the global chemicals industry, the auto industry in North America, and the tech sector in the Europe, Middle East and Africa (EMEA) region have the highest proportion of issuers with leverage concerns, it noted.<\/p>\n
Fitch estimated that 16% of corporate issuers globally had \u201cleverage that exceeded their negative rating sensitivities\u201d as of the end of 2024.<\/p>\n
By geography, the Asia-Pacific region has the highest share of issuers (22%) with the worst leverage ratios, it noted.<\/p>\n
Certain national sectors will also be heavily impacted by higher tariffs, it said \u2014 including homebuilders in the U.S. and China, the building materials and diversified industrials sectors in Mexico, and airlines in Latin America.<\/p>\n
While leverage is a key concern for corporations, \u201crating downgrades could also be triggered by other factors, including falling profitability and cash flow generation, and deteriorating business factors,\u201d Fitch noted.<\/p>\n
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