Politics · India Bureau
Global credit conditions to deteriorate in 2027, warns Moody's
Credit rating agency Moody's has cautioned that global credit markets will face headwinds next year due to elevated financing costs and energy prices, even as artificial intelligence investment continues at scale.
LSN India ·
Moody's Ratings released its 2027 Global Credit Conditions Outlook on Tuesday, identifying rising borrowing costs and persistent energy price pressures as key factors that will strain credit availability and conditions across global markets.
While acknowledging that investment in artificial intelligence will remain substantial, the ratings agency noted that capital markets will increasingly scrutinize whether the revenue generation and productivity improvements from such spending justify the massive scale of deployment. This shift in investor focus is expected to create winners and losers among companies, with some benefiting from stronger demand and efficiency gains while others face intensified competition and diminished pricing power.
Moody's also flagged growing government intervention as a significant influence on credit dynamics. Tariffs, regulatory measures, export controls and strategic state investment are expected to play an expanding role in shaping credit outcomes and market dynamics throughout 2027.
The agency cautioned that because many of these policy instruments can be rapidly introduced or reversed through executive action, shifts in government strategy could swiftly alter trade flows, capital allocation decisions and competitive dynamics across industries and geographies.