Industry Credit Outlook 2026
What is the Industry Credit Outlook for 2026?
We recently published our Industry Credit Outlook 2026.
These 25 reports set out our industry experts' credit outlook for global industries, including ratings trends, main assumptions for 2026 and beyond, credit metrics and financial policy prospects, and what we see as the main risks and opportunities around the baseline view. They draw on our assessments of over 4,700 nonfinancial corporate entities.
Geopolitical tensions continue to reverberate, and although see positive prospects for revenues and cash flow, macroeconomic headwinds and divergences persist. Prominent themes also include surging investment in AI, automation, and digitalization – and the associated opportunities and credit risks – as well as ongoing efforts towards sustainability and energy transition.
Industry Cyclicals
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Capital Goods
Technology and electricity investments power growth
Growth eases after an unexpected jump. Our economists forecast real U.S. equipment investment growth moderating to 2%-2.5% in 2026 and 2027 from a blistering 7.9% in 2025.
Mergers and acquisitions (M&A) pick up. After a few years of strategic splits and separations, strong equity markets and low corporate credit spreads might support large M&A deals
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Aerospace and Defense
Aerospace and Defense
Strong year ahead, despite supply chain constraints
Airframers continue to boost build rates. Boeing Co. ramps up 737 MAX production and deliveries, while Airbus increases production of its A320 models, and widebody rates recover slowly.
Domestic and international flying hours will stay strong, despite pressure on consumers. This will continue to drive demand from airlines for new aircraft and aftermarket services.
Defense demand will remain elevated for some time, as many governments realize that 20-30 years of peacetime has left their armed forces too small and antiquated.
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Autos
Autos
Less tariff heat, more demand chill, outlook stays cautious
Demand and affordability headwinds persist given exhaustion of pent-up demand in China, the end of prebuying in the U.S., ongoing inflation, higher unemployment, and affordability concerns.
Mounting pricing pressure. Pricing pressure in China will remain intense, while Europe faces more competitive pressure, and the scenario for the U.S remains highly uncertain.
Product mix pressure. Vehicles with lower content to push volumes will hurt mix.
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Chemicals
Chemicals
The clouds aren't clearing yet
Modest volume increase, mainly in China, amid limited economic growth. The gap between chemical volume growth and GDP growth will not narrow quickly, particularly in Europe.
Modest improvements in margins, due to somewhat better operating leverage and restructuring benefits, easing some pressure on credit metrics.
Resilient market conditions for fertilizers. Solid demand and cost-saving initiatives should sustain fertilizer profitability, despite affordability challenges
Consumer Cyclicals
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Consumer Products
Stretched consumers will drive weaker volumes
Tariff-related pressures. The full impact of tariffs will trickle through into 2026 and further constrain pricing power in the key U.S market.
Pricing will be calibrated to volumes. Given weak volumes, targeted pricing and aggressive cost management will help sustain the high A&P spend and improve margins moderately.
Market share losses to private label and challenger brands should moderate. Brands are stepping up investment and innovation to defend their competitive positions.
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Gaming
Hotels, Gaming and Leisure
Travel and entertainment spending diverges
Gaming: Gross gaming revenue (GGR) growth to be steady in Macao; slowing consumer spending to pressure regional U.S. gaming; Europe faces consolidation, regulation, technological change.
Lodging: U.S. revenue per available room (RevPAR) will likely be aided by multiple large-scale events and an improved holiday calendar, which could offset significant underlying weakness in midscale and economy segment hotels. Europe will stabilize and have growth opportunities.
Cruise: While yield growth has moderated from recent highs, resilient forward bookings, strong close-in demand, and robust onboard spending will drive revenue growth.
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Media and Entertainment
Media and Entertainment
M&A coming soon to a media company near you
Streaming profitability should improve, putting legacy media companies on stronger footing despite continued declines in linear TV. Disney is guiding to 10% operating income margins.
Global advertising will stay on solid ground. We expect mid-single-digit percentage growth driven by digital platforms, especially Alphabet and Meta, as they continue gaining market share.
Demand for high-quality content remains strong. More disciplined spending means fewer projects, which may hurt smaller studios and companies supporting the studio ecosystem
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Retail and Restaurants
Retail and Restaurants
Consumer spending bifurcation persists
Spending divergence widens among income levels. Higher-income households will continue to spend, whil
Prudent spending on growth and store openings. Store expansion investments are limited in a low-growth environment. Companies prioritize tech and automation investments.
Opportunistic shareholder returns. High cash balances, low growth, and lower interest rates could fuel activity in certain subsectors, but we expect prudent capital allocation
Energy
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Midstream Energy
Well positioned for whatever comes next
Data center and LNG growth will boost demand for natural gas infrastructure. Planned expansions of about 4 billion cubic feet per day (Bcf/d) placed into in service in 2026.
Industry consolidation could accelerate, with possibly larger transactions as private company market universe shrinks.
Higher capital spending could test financial discipline. Our preliminary forecast of capital expenditures (capex) spending increases of 5%-10% over 2025, mostly natural gas-driven.
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Metals and Mining
Metals and Mining
A good mine is hard to find
Copper prices stay high on tight supply, with a mixed outlook for other metals. Supply dynamics are likely to remain a significant factor in the face of broadly persistent demand. We assume gold moves off record highs for credit analysis, but see continued strong sentiment.
Manageable cost and capital expenditure (capex) inflation. Enduring cost rises are likely to continue, even as energy costs abate, but will likely stay within companies’ planning ranges.
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Oil and Gas
Oil and Gas
Low crude prices tied to oversupply: gas linked to LNG
OPEC+ reacts to an oversupplied market. OPEC unwound some of its production cuts, but likely must reduce supply to prevent oil prices from falling below $50 per barrel.
Gas appears supported in 2026. The staggering number of LNG facilities being built in the Gulf of Mexico will support U.S. natural gas fundamentals. European prices may rebound, because they are unseasonally weak, and stored gas is below average.
Markets for oilfield services providers remain challenged. Upstream consolidation and a focus on reining in capex will continue to limit top line improvement and growth opportunities.
Real Estate & Construction
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Homebuilders & Developers
Poor affordability slows down demand
Lack of affordable homes and rates are pressuring U.S. demand. High home prices and higherthan-expected mortgage rates are pricing many buyers out of the market.
Moderate price growth in EMEA. Prices increase low-single-digit percent from a resilient job market, improving consumer confidence, and stable but still elevated mortgage rates.
China’s primary property sales will decline further. Nationwide, sales will further drop in 2026 amid soft demand.
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Building Materials
Building Materials
Green shoots of recovery in some markets and regions
Modest recovery to be skewed toward the second half of the year. In most regions, we assume a steady rebound in residential markets, with some pickup in renovation and lagging new build.
Margins to remain broadly stable. Profitability will depend on the ability to pass on still-elevated labor and commodity costs, with limited capacity for price increases significantly above inflation.
Diversification, sustainability, and innovation will drive capital allocation. Decarbonization, market consolidation, and geographical and product mix expansion will remain in focus.
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Engineering and Construction
Engineering and Construction
Data center buildout fueling growth
Solid organic revenue growth. Power and transportation sectors are poised to grow at aboveindustry-average levels, but weaker demand and financial challenges in China will drive revenues lower in that market.
Modest margin expansion. Contracts structured to mitigate risk and increased focus on speed to market by project sponsors rather than pricing could temper margin growth.
Strengthening cash flows. Issuer focus on working capital management and accelerating collections will help strengthen cash flow generation.
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Real Estate
Real Estate
Cautiously improving outlook
More modest rent increases. Rent growth should normalize at low single digits after a period of robust increases, as indexation-driven rent uplifts dwindle.
A focus on capital recycling rather than aggressive growth. Investments should increase, due to better funding conditions and a brighter market outlook, but focus on portfolio improvements.
Transaction activity should recover gradually. We anticipate a continued recovery in transaction activity, driven by improving economic conditions and rising investment volumes.
Other Corporates
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Technology
AI drives industry to new heights -- can it sustain beyond 2026?
IT spending will grow 9% in 2026 after a robust 12% expansion in 2025, supported by continued AI infrastructure buildout and resilient software and IT services demand.
AI spending will remain strong in 2026, and the top five U.S. hyperscalers will grow their capital expenditure (capex) by 38% to near $600 billion after a record 68% increase in 2025.
China remains uncertain. China’s IT spending could benefit as chip import restrictions ease, but weak consumer sentiment and a slowing auto market pose challenges.
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Health Care
Healthcare
Legislative and financial risks may pressure stable outlook
Demand remains solid. We are projecting industry growth of 5%-7% across the sectors.
Return of M&A. The surge in announced mergers and acquisitions (M&A) in the second half 2025 likely continues into 2026.
Credit metrics may worsen. With increasing M&A, persistent inflationary labor and material pressures, and rising claim approval and processing delays, we could see metrics deteriorate.
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Telecommunications
Telecommunications
Consolidation, better conditions, but disruption in the U.S.
Earnings growth stays strong in 2026. We expect average telecom revenue growth of around 3% and EBITDA growth of 4% through 2027, supported by upselling and increased bundling.
EBITDA margins show improvement through 2027, reflecting increased convergence and focus on cost cutting.
Telecom capital expenditure spending and investments are subsiding in markets with highly developed infrastructure (except U.S.), improving free cash flows.
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Transportation
Transportation
Resilient demand in a turbulent trade environment
Resilient passenger travel demand. We assume steady growth in passenger travel and container shipping volumes, supported by solid economic activity, but subdued demand for surface freight.
Flat pricing environment. Prices in most transportation sub-sectors, other than railroads, should remain fairly stable.
Higher capital expenditure (capex) driven by aircraft deliveries. Somewhat easing supply chain constraints could support higher capex for airlines, which will temper free cash flow generation.
Infrastructure & Utilities
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APAC Utilities
Managing risks from uneven transition and grid bottlenecks
Power demand to maintain mid-single-digit growth. Power demand growth in China is slightly higher than GDP albeit slower than before. Incremental growth can be satisfied by renewable buildups. Power demand in other Asia-Pacific markets will largely follow economic growth rates.
Profitability facing challenges. Debt-funded capital expenditure (capex) for renewables expansion will stay high and add to Asia-Pacific power operators' debt burden. On-grid tariffs for renewables are falling in many markets given more marketized trading mechanism and cost cuts.
Governments continue to push for energy transition. More policy push is needed to keep up with the climate transition trajectory for most Asia-Pacific markets.
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EMEA Utilities
EMEA Utilities
Energy addition, not just transition
Volatile gas and power prices will benefit flexible generators. However, in some countries abundant renewable and nuclear generation will increasingly depress wholesale power prices.
We expect a cautious approach to investments. Massive power generation and grid capex need cautious financing, and we expect capex to be prioritized over shareholder remuneration.
Ratings headroom could further narrow for power producers and integrated players. Balance sheets could be eroded by high and increasing capex, interest rates, and still sizable dividends.
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Latin American Utilities
Latin America Utilities
Curtailment reaches new highs, threatening project viability
Mild La Niña climate phenomena for 2025/2026. Drier conditions for Brazil and Chile should pressure prices, while increased humidity in Colombia and Panama should alleviate spot prices in the northern region of Latam.
Continued investments in transmission, distribution networks, and non-conventional renewables. Given the region’s natural potential, energy transition continues to be a key part of expansion. At the same time, distribution companies (discos) will be required to invest in resilience to frequent and severe climate events.
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North American Competitive Power
North America Competitve Power
Rising AI spending lifts the power sector
New gas-fired generation. We expect significant bilateral long-term power contracts to support new construction build.
Capacity prices in PJM to stay higher for longer. With supply struggling to add capacity, we now expect generation additions to lag incremental demand each year through early 2030s.
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North American Regulated Utilities
North America Regulated Utilities
Data center growth will support credit quality in 2026
Credit-supportive funding of cash flow deficits. The industry’s cash flow deficits at about $100 billion requires balanced equity and debt funding to maintain credit quality.
Managing regulatory risk. The industry’s rate case filing revenue requirements are materially increasing, requiring consistently fair rate case orders to maintain credit quality.
Managing the customer bill. The electric bill represents about 2% of household income, and significant bill increases could challenge a utility’s ability to manage regulatory risk.
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Transportation Infrastructure
Transportation Infrastructure
Building resilience amid geopolitical uncertainty
Moderate volume growth. We anticipate global economic growth will uplift volumes somewhat, with 2026 global GDP growth now forecast at 3.2%.
Rising capital investments. Steady GDP-linked volume growth supports investments toward expansion, improvements to competitiveness, and operational efficiencies.
The sector is focusing on balance sheets amid lingering uncertainty and growing investment needs, managing debt levels and interest rate exposure to minimize the effect to credit metrics