UK Default Risk to Rise in Second Half of 2024 With Telecoms and Tech Most Affected, Credit Benchmark Reports
July 24 2024 - 1:34AM
Business Wire
Credit Benchmark, a leading provider of credit risk data and
analytics, today said that it predicts default risk for UK
industries to rise this year before plateauing in 2025 as
post-election economic growth picks up. However, as explained in
its new UK Default Risk Outlook, some industries face heightened
credit deterioration, with Basic Materials, Telecoms and Technology
all predicted to see default rates increase by more than 10%.
“The new Labour administration has inherited some challenging
fiscal limits but political uncertainty in other major markets is
expected to bring an influx of foreign investment to the UK,” says
Michael Crumpler, CEO of Credit Benchmark. “This supply of capital
should see growth in several UK industries, but any credit impact
will take some time to unfold.”
“And with interest rates remaining high, the shorter-term credit
outlook for UK industries is for deterioration,” continues Mr
Crumpler. “Our analysis shows that only 18% of the 134 UK sectors
tracked by Credit Benchmark will see any decrease in default risk
over the next year.”
“We expect to see the biggest jump in defaults in industries
already facing global pressures. Basic Materials, Telecoms and
Technology firms are looking at increases of more than 10%,”
explains Mr. Crumpler.
Credit Benchmark’s new report covers 10 major UK industries,
representing more than 11,000 companies, 90% of which are not rated
by a major credit rating agency. This significant coverage and
diversified dataset allows Credit Benchmark to make unique and
credible sector-specific default risk projections for 2024/25. All
of Credit Benchmark’s data and projections are based on borrower
probability-of-default estimates, which are aggregated from over 40
leading banks, nearly half of which are GSIBs.
This report is the third in Credit Benchmark’s Default Risk
Outlook series, with analysis on US and EU Industries published
earlier this year.
About Credit Benchmark
Credit Benchmark is a leading provider of credit risk data and
analytics. Its products are derived from contributed risk data from
more than 40 global financial institutions.
These data are aggregated, anonymized, and published twice
monthly in the form of unique obligor-level Credit Consensus
Ratings as well as credit transition matrices, sector correlations
and credit indices.
The data set covers over 105,000 legal entities, 90% of which
are not publicly rated.
Credit Benchmark’s insights are trusted by major financial
institutions globally and are used to benchmark their own internal
credit risk analysis against those of a global peer group, and gain
accurate credit risk views where none were previously
available.
Credit Benchmark was founded in 2015 and is headquartered in
London, with offices in New York and Bangalore.
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Laura Saville Head of Marketing
laura.saville@creditbenchmark.com T: +44 20 7099 4322