Fitch downgrades 25% of US industry outlook to "deteriorating"

International rating agency Fitch said on the 21st that policy risks cast a shadow over the US credit outlook. In its mid-year update, Fitch downgraded its outlook for 25% of US industries in 2025 to "deteriorated" due to increased uncertainty, slowing economic growth and expectations that interest rates will remain high for a long time. The recently passed tax and spending bill highlights long-term challenges to the US fiscal outlook and will weigh on healthcare-related industries, Fitch said. The combination of the tax bill and the extension of previous tax cuts is likely to keep the US government's overall deficit above 7% of GDP and push the debt-to-GDP ratio to 135% in 2029. Fitch forecasts that default rates on US high-yield bonds and leveraged loans will rise to 4.0-4.5 per cent and 5.5-6.0 per cent respectively by 2025, with policy developments and sector-specific risks remaining the main drivers of rating trends this year.