1、 Credit Research Christine Ip Yucheng Zheng Terence Chan,CFA David Tesher Eunice Tan Global Head of Ratings Thought Leadership Ruth Yang Contents What we think 2 Scenario assumptions 4 Scenario outcomes 6 Related research 10 Appendix 11 Global Debt Leverage Cash Flow Negative Corporates Could Double

2、 In 2023 A Stress Test Of 20,000 Unrated Corporates Dec.12,2022 This report does not constitute a rating action Key Takeaways Worsening conditions in 2023 could temper this years tentative rebound in average earnings.Our stress tests show less-creditworthy corporates are still vulnerable.Under our b

3、ase case,cash flow negative firms would rise to 11%,from 8%in 2021.Severe stress test shows double trouble.Weve repeated the tests we last did in July.In our severe test in which interest spreads and inflation increase by 300 bp each,the cash flow negative ratio doubles to 16%.China corporates remai

4、n most vulnerable.As we expected,the cash flow negative ratio of this cohort rises the most under stress(in percentage point terms).This is followed by Asia-Pacific ex-China and emerging markets,then Europe and North America.Chart 1 Cash Flow Negative Corporates Double In Our Severe Inflation-Intere

5、st Stress Test Note:Stress factors shown in the above infographic relate to the severe stress test.APAC-Asia-Pacific.Ex-CN-Excluding China.EM-18-Emerging markets-18.bp-Basis points.a-Actual.p-Projection.Source:S&P Global Ratings.Global Debt Leverage:Cash Flow Negative Corporates Could Double In 2023

6、 Dec.12,2022Dec.12,2022 2 What We Think A shadow hangs over global corporates heading into 2023.As the Russia-Ukraine war drags on and major central banks continue to fight inflation,global corporates face a triple-whammy of lower growth,squeezed margins,and deteriorating financing conditions in 202