Globally, credit quality continues to recover slowly from a lower ratings base, as the world adapts to the dominant Delta variant and growth regains resilience. Rating upgrades are outpacing downgrades this year, although net upgrades so far represent only about 12% of the net COVID-induced downgrades in 2020. Credit outlooks in aggregate have stabilized and returned to pre-pandemic levels, while default rates have fallen sharply and are trending toward their long-term average. However, a confluence of headwinds could challenge the credit environment as we reach an inflection point for monetary policy and central banks start their gradual path toward normalization at different paces around the world.