The first few months of 2022 mark a turn in positive credit momentum, with downgrades now outpacing upgrades, reversing a trend that started a year ago on the back of the solid economic rebound and remarkably favorable global financing conditions. Just as much of the world was hoping to move on from the pandemic, the Russia-Ukraine military conflict brings a new set of challenges and uncertainties (see chart 1). Soaring energy and food prices exacerbating already high inflationary pressures, supply chains facing new disruption risks, the lingering pandemic and mobility restrictions (particularly in China), and the prospects for sharply higher interest rates are all pushing lenders and investors to reassess their risk-reward appetites. Yields across many market segments have risen after more than a year of historically accommodative conditions.