Balanced Perspective on 2024 Prospects for US Investment-Grade Corporates Amid Yield Curve Adjustments
Fitch's comprehensive coverage extends to 27 sector outlook reports, encompassing the North American investment-grade corporate universe.
Karobar
In its latest outlook report, Fitch Ratings affirms a resilient stance for North American corporate investment-grade credit profiles in 2024. Despite the backdrop of slow economic growth and uncertainty surrounding interest rate cuts and U.S. yield curve normalization, the majority of Fitch-rated issuers are poised to navigate the year with leverage below negative sensitivity.
While entering 2024 with robust credit profiles, Fitch emphasizes that idiosyncratic factors, shifts in financial strategy, or unexpected events could introduce downside risk for certain issuers.
Projections indicate a median revenue growth of approximately 3% within Fitch's investment-grade portfolio. Margin expansion within the mid-20% range is anticipated, driven by lower inflation, although labor costs may rise for many issuers. Furthermore, Free Cash Flow (FCF) is expected to improve, thanks to relatively stable capital expenditures across most issuers. The median gross EBITDA leverage is projected to decrease from 2.5x in 2023 to 2.3x.
The sector outlook reveals a balanced perspective, with 74% of sectors deemed neutral, 19% experiencing deterioration, and 7% showing improvement. In terms of issuer Rating Outlooks, 82% are Stable, 10% Positive, and 8% Negative, indicating limited downside risk for the majority of issuers throughout 2024.
