“Our outlook for European corporates is mixed, and overall trending negative,” says Karl Pettersen, co-head of Corporates ratings and lead author of the rating agency’s Corporate Outlook 2026.

“Structural shifts are likely to generate continued cost pressure, as well as increasing credit and sectoral bifurcation in 2026 and beyond. Successful adaptation and execution may stabilise credit narratives in some cases, while persistent credit erosion will remain a reality for others,” Pettersen says.

“In this context, it pays to be extra vigilant. We are looking at credit risk for the rest of the year with our eyes wide open,” he says.

Scope identifies four main credit-relevant trends for 2026

Structural change is accelerating across politics, technology and finance. Longstanding assumptions that underpin capital flows and credit quality are shifting at speed and scope. The full effects of these changes are difficult to capture with traditional forecasting methods. In some instances, change affects the tools used by market participants to evaluate, and ultimately price, assets and liabilities.

Against this backdrop Scope is focusing on four main themes with material implications for credit risk:

• A new geopolitical reality hangs over the market. Tariffs remain a recurring symptom of broader geopolitical frictions. For European corporates, this means rethinking supply chains and high-grading assets to protect value. Neither is cheap or easy. Appreciating currencies and surging import competition are redefining competitiveness and business risk profiles across sectors and geographies.
• Credit markets are changing fast. Opinions are divided about the rise of private debt in Europe: now exceeding the high-yield corporate bond and leveraged loan markets, it is a boon for liquidity and capital velocity at the cost of rising opacity. Public credit data is becoming less comprehensive. Innovation in private lending creates layers of linkages to bank and fund ecosystems that are hard to discern on a scale that points to systemic risks.
• AI and digitalization are on the march. Both represent an unprecedented force in value creation, but also in value concentration. Equity markets have embraced the vast opportunities promised by this technological revolution, but the jury is still out on if, how, and when, this translates into value accretion on a similar scale – and for whom. Across our corporate ratings, AI may ultimately accentuate a widening gap between winners and losers as returns take shape and competitiveness is further re-defined.
• Europe faces rising demands for capital and security. Defence, energy, climate transition and structural reform: all require a sustained acceleration in investment while sovereign balance sheets are stretched. Compromises will be required, and corporates will be asked to contribute.

These trends will continue to shape European corporate credit quality. Early indications suggest that several sectoral pressure points are now structural, not cyclical,” says Pettersen.

“This is particularly relevant for Europe, which remains a heterogenous market with diverse fiscal priorities, uneven market depth and insolvency laws, and important regional economic interlinkages. In some cases, growing ratings bifurcation signals that these pressures are already materializing, just at different speeds across the rating scale.”

“More than ever, careful and comprehensive assessments of individual and sectoral business risk profiles, cash flow prospects, and the quality of issuers’ access to liquidity, will be key.

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