Digital technologies are helping businesses remain operational during the pandemic, prompting a reassessment of their long-term IT strategies. As macroeconomic conditions improve, this will benefit sectors such as cloud infrastructure services, cloud-based software, semiconductors and IT services. But IT vendors with meaningful exposures to on-premise hardware and software will be challenged, as will printer and printer-services companies.

Overall credit effects of COVID-19 have been most acute for lower-quality debt issuers in consumer-sensitive sectors and for those with weak liquidity. Recovery over the next year will likely vary, with improvement the slowest for sectors already bearing the brunt of pandemic-induced business disruption.

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The benefits of low interest rates for corporate borrowers and infrastructure project debt issuers will depend largely on their exposure to local-currency debt. Low rates will challenge bank margins as asset risk and loan-loss provisioning threaten profitability, and they will hold back investment returns for many insurers.