Easing financial conditions and returning investor appetite for corporate debt have drawn a line under the European real estate sector’s funding squeeze, though a daunting short- to medium-term refinancing challenge remains.

Management changes, strikes and shrinking profits late in 2024 show how severely a mixture of cyclical and structural challenges is unsettling Europe’s auto sector.

European utilities with significant exposure to power generation have maintained sufficient hedging in place to generate rating-supportive cashflow at least until 2025-26 even as capital expenditure on renewables and networks rises.

Net interest margins in domestic retail banking are being squeezed but net income will remain in an acceptable range for 2023, thanks to low cost of risk, solid contributions from other business lines and limited growth in expenses.

The credit outlook for companies in the European construction industry remains mostly stable due to healthy order backlogs despite the uncertain economic environment. The squeeze on margins is pushing more firms to expand their concessions activities.

The massive spending that Europe’s electricity grid operators need to undertake to adapt electricity networks to the energy transition is straining their balance sheets.

European retailers face declining demand and narrowing profit margins as inflation persists, with suppliers of discretionary goods most vulnerable to the squeeze on EBITDA as less confident consumers spend less and postpone unnecessary purchases.

UK telecom operators will struggle to deleverage in the medium term as they are in the middle of an upswing in the capital expenditure cycle, driven by increased investment in fibre networks, amid increasing interest rates and resurgent inflation.

Europe’s power utilities still have large volumes of their output favourably hedged against volatile electricity prices. It is good for their earnings but a guarantee of elevated prices for primary and secondary customers despite declines on spot markets.

Europe’s building materials industry, grappling with shortages of raw materials, faces a growing cost crunch and cashflow squeeze due to sky-high energy prices, hence the importance of maximising cost savings in the months ahead.