Here are the top highlights from this week's edition of Moody's Credit Outlook:
First Reads
An added 25% tariff on US imports from India atop its prior 25% reciprocal tariffs widens the gap with the 15%-20% rates for other Asia-Pacific (APAC) countries. Overall, however, our analysis of nearly 3,500 nonfinancial companies worldwide showed that nonfinancial companies in APAC are largely insulated from the three main channels of tariff risk – trade, macroeconomic and financial – while companies in Latin American typically face higher overall exposures than in Asia-Pacific or Europe.
Featured News and Analysis
Strike at Boeing goes ahead despite offered concessions, a credit negative
We believe the strike will primarily affect Boeing’s Defense, Space and Security segment, which contributes around 30% of Boeing’s total sales; and to a lesser extent, the company’s Boeing Global Service government business.
Amphenol will pay $10.5 billion for CommScope's CCS business, increasing fiber optic offerings but also leverage
Despite raising pro forma leverage to around 3.1x as of Q2 2025 from 1.6x, the purchase will expand Amphenol's fiber optic product offerings and allow it to provide a wide range of copper and fiber connect products to its customers.
PEMEX's 2035 strategic plan raises credit risk for Mexican development banks
Mexico announced a new federally backed MXN250 billion ($13.3 billion) investment vehicle to fund strategic projects for financially challenged Petróleos Mexicanos (PEMEX). Development banks, commercial banks, and private investors will finance the fund, increases their exposure to oil-related risks.
Asia-Pacific data center capacity will more than double by 2030 on AI surge
Asia-Pacific is fueling the global data center boom and the region could host over 40% of capacity by 2030. Growth will need investment of $800-$900 billion but stronger emerging market growth is fuelling value-chain demand, bolstered by expanding financing options.
Credit in Depth
Globally, companies in the Crossover Zone decreased in Q2 as potential fallen angels dropped
The number of nonfinancial companies in the Crossover Zone (the border between investment grade and speculative grade) fell to 76 in Q2 from 80 in Q1. Potential fallen angels (at risk of downgrade to speculative grade) fell by three to 49 in Q2. Potential rising stars (on the cusp of upgrade to investment grade) dropped by one to 27. Trade tensions, geopolitical issues, higher-for-longer interest rates and weaker growth in some regions could keep the number of potential fallen angels elevated.
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