Challenging conditions ahead. Amid record-high global leverage, a trifecta of rising defaults, higher return thresholds, and more cautious lending will challenge borrowers over the next two years. Cashflow negative entities recovered slowly. Of our sample of global corporates (mostly not rated), 9% were cashflow negative in 2022, more than twice the 2019 level, despite the post-pandemic economic rebound. Our base case expects the ratio to creep up to 10% in 2023-2024. The ratio could jump to 13% if financing contracts by 1%. This result from our stress test reflects vulnerability due to high corporate leverage built up during the pandemic and yet-to-recover cashflows.