The Biden administration’s initial executive actions mark a distinct repositioning on key issues. These shifts have economic and policy implications, with potential credit effects for structured finance, oil and gas, automobiles, tourism and higher education.

We have rolled out new environmental, social and governance (ESG) credit impact scores as well as E, S and G issuer profile scores for sovereigns to provide greater clarity, consistency and differentiation of risk exposures. Our new report explains that sovereigns’ exposure to environmental and particularly social risk is mostly negative and often combined with weak governance and financial strength. However, the credit impact of ESG varies widely, from positive to very highly negative.

New measures to curb the spread of COVID-19 will weaken some issuers’ credit quality, but the economic impact will not be as pronounced as last year. Restrictions are generally less stringent than they were and government support and easy financing conditions will also help sustain overall credit quality.