Credit Outlook: Corporate America's Credit Health

Goldman Sachs Exchange podcast explores the impact of surging interest rates on the health of corporate America's credit. While concerns about a major default cycle are low, a mean reversion in default rates towards the long-term average is expected. The optimistic outlook is supported by healthy corporate fundamentals and a brighter prospect of a soft landing for the economy, reducing the risk of a severe deterioration. However, the leverage finance space and the broadest-innocated loan market require closer monitoring due to limited ability to transition to a higher-cost capital environment. Refinancing risk for corporates in 2024 or 2025 is not a significant concern, as it is not front-loaded and there is capacity on the investor side to absorb it.