Moody's raised its global corporate default forecast to 3.1%, warning it could increase to the 6% caution line in the future.

International credit rating giant Moody's latest report warns that due to the continued escalation of global trade wars, the default rate of high-yield (non-investment grade) companies this year may rise from the original forecasted 2.5% to 3.1%. Although this number is still lower than the level of the same period last year, the report specifically points out that if there are no significant economic benefits, the default rate may soar to the caution line of 6%. This forecast is based on three core assumptions: first, tariff conflicts will lead to a decrease in US economic growth rate by at least 1 percentage point; second, major trading partner economies will be adversely affected; and finally, the financing environment will deteriorate significantly due to heightened risk aversion. The Moody's analyst team emphasizes in the report that global credit strategists have generally lowered their economic expectations for 2025, with the expansion of risk premiums and the slowdown in growth forming a vicious cycle. It is worth noting that in the first quarter of this year, there have been 27 global corporate default cases, a decrease from the 38 cases in the same period last year, but there is a clear trend of concentration in industry distribution. The medical, business services, retail, hotel leisure, and telecommunications sectors have contributed to more than half of the default events, indicating that the contraction of consumer demand is accelerating the transmission effects on the real economy. Moody's warns that the uncertainty brought about by the trade war is driving up the cost of corporate financing, adding to the dual pressure of declining risk appetite among investors, and the debt chain of fragile industries is facing an unprecedented test.