Recent increases in market volatility related to tariffs have raised fears for growth and higher corporate default rates, S&P Global Ratings said in the "Corporate Default Forecasts Maintained, But Risks Are Rising" report published today.

However, for now, we are maintaining our base-case projections for 2025, including a 3.50% speculative-grade corporate default rate in the U.S. and 3.75% in Europe.

This is partly because a large portion of speculative-grade issuers in the U.S. and Europe are from service-based sectors, limiting their initial exposure to tariffs on goods.

We have mentioned tariffs and economic uncertainty as potential factors in our corporate default projections since November 2024 and included tariff-related stress in our pessimistic scenarios for the U.S. and Europe.

In our view, threats to overall consumer spending and the macro economy are larger, if more indirect, issues for defaults ahead.

The longer tariff uncertainty lasts, or if it worsens, the greater the likelihood speculative-grade corporate default rates increase, moving toward our pessimistic cases of 6.00% for the U.S. and 6.25% for Europe, respectively.

This report does not constitute a rating action.

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