Fitch Ratings says US elections unlikely to directly affect ratings of American corporations

(MENAFN) Fitch Ratings stated on Monday that the upcoming US presidential election in November is unlikely to have a direct, immediate impact on the ratings of American corporations. The agency pointed out that direct rating changes due to federal policy shifts are uncommon. However, it acknowledged that significant changes in climate and social policies could have long-term effects on various sectors, particularly in the auto, energy, healthcare, and utility industries.

According to Fitch, all corporate sectors are susceptible to the impacts of presidential administrations and congressional power dynamics, given that the federal government oversees key issues such as corporate tax rates and anti-trust policies. Federal policies and regulations can significantly influence sectors’ profitability and cash flow, affecting asset valuations and capital deployment decisions.

The agency also highlighted that the lengthy process of passing and implementing new legislation provides companies with the opportunity to adjust their business models and mitigate potential negative impacts from policy changes. Fitch believes that under a potential Donald Trump administration, corporate credit profiles might be notably affected by factors such as trade protectionism, ongoing fiscal pressures, rollbacks in climate policies, and changes in social policies.

Furthermore, Fitch noted that geopolitical and foreign policy, financial deregulation, privatization, and restrictive immigration policies could indirectly impact US corporate credit. A “red-wave” scenario, where Republicans gain control of both the White House and Congress, could lead to more substantial revisions to existing policies in these areas.

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