Outlooks 2026: Six credit risks

Executive Summary

Six Credit Risks Outlook 2026 – Six risks that could threaten credit in 2026

Global economic growth is likely to be subdued but stable this year. And although we expect the default rate to decline during 2026, it would not take a particularly big shock for it to rise instead. This report examines six scenarios that could significantly disrupt the credit landscape this year. These examples highlight only a selection of potential shocks, as numerous economic, technological and climate-related credit risks could still emerge unexpectedly. None of the scenarios outlined here represent our base case—nor are they necessarily how we would expect risks to crystallise. Instead, our aim is to show the wide range of plausible scenarios that could lead to more negative credit outcomes.

Key takeaways:

• Geopolitical fractures. As political polarization becomes an enduring feature of the geopolitical landscape, there is a rising risk that a specific event triggers shocks that would swiftly spill into credit markets via higher risk premia and funding stress.
• Inflation fears reignite. In a year when there will be a leadership transition at the US Federal Reserve, should the declining trend in inflation halt or reverse, there is a risk of inflation expectations becoming de-anchored, driving yield volatility and distorting credit pricing.
• AI equity price correction. An AI-driven tech correction would hit startups, semiconductors, data-center assets and tech-hub commercial real estate (CRE). It would likely also result in tighter financing conditions and weaker economic growth.
• AI productivity shock drives job losses. Rapid AI-driven efficiency gains could trigger major white-collar layoffs, weakening demand and tax revenues while straining public finances and increasing social and political instability.
• Stress in private credit generates contagion. A widespread downturn in asset quality reveals structural weaknesses in private credit, coupled with lower recoveries. Contagion through insurers, banks and hybrid funds could lift risk premia more broadly as investors' risk appetite diminishes.
• Sovereign yields spike. Fiscal fragilities and record refinancing needs are pushing term premia higher and steepening curves for major advanced economies. Persistent yield pressure would tighten financial conditions and weigh on global growth.

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