Global credit conditions are expected to weaken in 2027 as higher financing costs and elevated energy prices put pressure on borrowers, Moody’s Ratings said. The agency also expects AI investment, government intervention and geopolitical priorities to increasingly influence credit markets.
New Delhi, November 10 — Global credit conditions are likely to weaken in 2027 as higher borrowing costs and elevated energy prices create fresh pressure on companies and borrowers, according to Moody’s Ratings.
In its 2027 Global Credit Conditions Outlook, the rating agency highlighted several factors that could shape global credit markets next year, including refinancing costs, artificial intelligence investment, government intervention and spending on energy security and defence.
Despite these pressures, major economies are expected to continue expanding, Moody’s said.
Higher refinancing costs pose risk
One of the biggest challenges will be the cost of financing.
Moody’s expects higher refinancing costs to put greater pressure on highly leveraged issuers and borrowers with significant near-term maturities.
Companies carrying large amounts of debt could therefore face greater financial pressure when existing borrowings come up for refinancing.
Elevated energy prices are also expected to create pockets of stress across credit markets.
AI investment to remain massive
Artificial intelligence will remain another major theme influencing global businesses and credit markets in 2027.
Moody’s expects AI investment to remain massive, but investors are likely to increasingly question whether the revenue growth and productivity improvements generated by AI justify the scale of spending.
The impact of AI could also vary significantly between companies.
Some businesses could benefit from stronger demand and productivity improvements, while others may face increased competition and weaker pricing power as AI disrupts existing business models.
Government intervention to play bigger role
Government policies are also expected to become increasingly important for credit conditions.
Moody’s expects measures such as tariffs, regulations, export controls and strategic investments to play a growing role in determining credit outcomes.
Since many of these policies can be introduced or reversed through executive action, changes could happen quickly and influence trade, capital allocation and competition.
This could create additional uncertainty for companies operating across international markets.
Energy security and defence spending
At the same time, increasing government and corporate spending in strategic sectors could create new opportunities.
Moody’s highlighted rising expenditure on energy security, critical minerals, defence and climate resilience.
Such spending could benefit companies operating in these sectors, although it could also increase costs for businesses elsewhere in the economy.
Overall, Moody’s expects a more challenging credit environment in 2027, particularly for highly leveraged borrowers, as higher financing and energy costs combine with rapid technological and policy changes.
