Credit outlook neutral for North American corporates

While uncertainty remains elevated, credit conditions for North American companies are expected to remain stable in 2026, amid continued economic growth and declining interest rates, says Fitch Ratings.

In a new report, the rating agency said that its current outlook for corporate credit in the year ahead is “neutral”  for North America, despite the heightened uncertainty around trade policy and geopolitics.

“Stabilizing, but still weak, economic growth and declining interest rates support core credit drivers,” Fitch said.

Overall, it’s expecting, “modest improvement,” in corporate revenue growth, margins and free cash flow in 2026, with corporate leverage expected to stay stable, or slightly improve. 

Against that backdrop, corporate credit risk is forecast to be “mostly contained,” the firm noted. 

Fitch said that its expectations are similar for both investment-grade and high-yield issuers. 

As it stands, the only sectors with “deteriorating” credit outlooks are the automotive, chemical and retail sectors, it noted, while 86% of its sector outlooks are “neutral.”

However, there are an array of downside risks to the outlook, Fitch also said.

“Key watch items for the fixed-income market include economic growth, inflation and the pace of monetary easing, corporate capex spending and capital allocation, … inflated asset prices and rising bubble risk, bond spread widening that raises the cost of debt and sectoral implications of shifting U.S. trade policy and changes in government spending,” it said.

Fitch noted that factors that could downgrade its outlook from “neutral” to “deteriorating” include a material downward revision to the economic forecast, a reversal in Fed policy, “or a severe market correction that hinders revenue growth, cash flow and funding conditions,” it said.

Specifically, a sharp drop in AI-driven spending could also, “mark a turning point for corporate credit,” it noted — as this could have ripple effects throughout the economy.