Credit conditions in Europe are set to worsen as containment measures to restrict the spread of the coronoavirus have forced the authorities to place economies on life support. We expect the second quarter to see the nadir, but the duration of the outbreak and the credit implications are highly uncertain and nonlinear. Top risks include a worsening pandemic despite all efforts, scarcity of financing for indebted corporate borrowers, the re-emergence of global trade tensions including between the EU and U.K., and asymmetric fiscal costs from the pandemic placing renewed pressure on the EU's cohesion. Aggressive measures to ensure that credit remains accessible to business and that employees can remain on the payroll are supporting liquidity and provide some protection to the supply side of the economy. But the demand shock will weaken credit quality, particularly for corporates in consumer discretionary-facing sectors and those with already stretched balance sheets.