Fitch sees limited credit risks for US corporates post-election

August 15, 2024 (MLN): Fitch Ratings does not foresee immediate credit implications for U.S. corporate issuers from the November 2024 presidential election, despite the wide-reaching nature of federal policy.

Rating actions directly due to federal policy changes are rare. However, significant shifts in climate and social policies could have long-term effects, particularly for the auto, energy, healthcare and utility sectors.

The agency believes corporate credit profiles under a Trump White House would be most affected by trade protectionism, persistent fiscal pressures, climate policy rollback and social policy reform.

Geopolitics and foreign policy, financial deregulation and privatization, and restrictive immigration also affect U.S. corporate credit but usually indirectly, rather than via direct policy application.

A “red-wave” election, where Republicans gain control of the White House and both chambers of Congress, would have the greatest likelihood of material revisions to existing policies on these matters.

All corporate sectors are exposed to varying degrees to changes in presidential administrations and the balance of power in Congress.

The federal government controls sweeping issues like corporate tax rates and anti-trust policy.

Federal policies and regulations can dramatically influence some sectors’ ability to generate profits and cash flow, ultimately affecting asset valuations and capital deployment decisions.

However, passing and implementing new legislation is a lengthy process.

This gives companies time to adjust their business models to mitigate the effects of negative policy outcomes on their financial profiles.

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