how default risk changes by sector

It is expected that the credit risk for a sample of over 14 thousand non-financial companies, in a basic scenario, improve slightly in the next 12 months at 6.13% from 6.22%. The economic cycle would, in fact, be supported by the decline in inflation and the improvement of financial conditions in the second part of the year. However, the slight improvement in the economic environment would not be sufficient to significantly reduce the aggregate probability of default as the credit risk for Italian non-financial corporations remains very close to the highest levels ever recorded. Additionally, credit ratings at the lower end of the credit quality spectrum are expected to increase slightly as these companies remain significantly more vulnerable to a continuing challenging business environment. This is what emerges from Credit Outlook 2024 by Cerved Rating Agencythe Italian rating agency specialized in assessing the creditworthiness of Italian non-financial companies and debt securities issues.

In detail – Cerved notes in the report – a notable one is expected differentiation within sectors and company sizes; in fact, financing conditions would remain challenging for the remainder of 2024, with a impact especially significant for smaller businesses.

The “hard scenario” hypothesis

The results of multiple scenario forecasts show a worsening of the credit rating in the intermediate scenario characterized by a slowdown in the economic cycle, a potential escalation of ongoing conflicts, a postponement of rate cuts by the ECB and delays in the implementation of the PNRR. Finally, in case of one extremely severe scenario (hard scenario), a further worsening of the probability of near default is expected at the 7% level.

Manufacturing sector

Cerved predicts a moderate decline of the probability of default for the sector manufacturing. Italian manufacturing companies will be able to partially mitigate the negative effect of the slowdown in the German economy thanks to its significant share of exports and the diversification of destination markets. The sector continues to be fueled by domestic demand, which is expected to grow slightly in 2024 thanks to higher disposable income, as demonstrated by the growth in consumption in the first months. The gradual decline in inflation should further support the stability of domestic demand.

Supply of electricity and gas

Despite the reduction in company revenues linked to a price effect and the greater selection of customer portfolios carried out in recent years, the general alignment of spreads on much higher values ​​than in the past has led to a decisive economic and capital strengthening of all supplier companies of electricity and gas. Despite the end of the protected market, the prospects for 2024 remain positive, since – writes Cerved – “we expect a more stable panorama in terms of raw material prices and consumption”.

Construction sector

This sector has strongly benefited in recent years from government aid such as Bonus 110 and Facade Bonus; as a result, business activity has improved over the last 3 years, particularly for smaller businesses working in private residential construction. Larger operators, on the other hand, are positively impacted by PNRR funds for infrastructure investments and are expected to improve their lag in the coming years as PNRR funds progress in implementation.


The transportation sector is expected to continue to experience a challenging environment due to geopolitical risks and subdued business activity. The probability of default in 2023 was significantly higher than pre-pandemic levels as the sector was hit by several issues in recent years, in particular rising transportation costs that could not be fully passed on to the end customer, causing a reduction of the already small margin. Furthermore, the sector still suffers from high personnel costs caused by labor shortages. However, in recent years, the sector has seen an increase in company concentration, driven by both defaults and acquisitions, which is generating great opportunities for players that survive in the market.

Tourism sector

Credit risk for tourism, hospitality and restaurant businesses has historically been high due to the typically smaller company size and high leverage expressed. Furthermore, this cluster was one of the sectors most exposed to the COVID-19 pandemic. All things considered, the probability of default in December 2023 was 12%, the highest value of the entire portfolio sample. The outlook for 2024 is significantly brighter than in the past, on the back of greater demand for entertainment services and improved real incomes in the second half of the year. Tourist attendance for summer 2024 is expected to increase and the strong winter season will pave the way for a significant decline in credit risk for 2024.

Real Estate

This sector is characterized by historically high PD due to high leverage and low levels of liquidity. The most unfavorable prospects – we read in the report – concern the international context, with banks significantly exposed to the commercial real estate sector (for example in Germany or the United States). In Italy the general context remains difficult, but real estate valuations record lower price volatility than in other geographical regions such as Northern Europe or North America. Estimates point to a slight recovery in 2024 starting from the second half of the year, supported by a different sentiment compared to 2023.


Agricultural business credit risk has historically been characterized by weak financial fundamentals with low liquidity reserves and high capital structures, with high levels of probability of default. Increasing margin pressure is expected to continue into 2024, coupled with labor shortages. Furthermore, climate change and stricter regulations on CO2 emissions by producers and agricultural businesses will weigh on the evolution of credit risk.

Textile industry

The textile industry is expected to face a challenging year as companies face supply chain and sustainability issues. First, demand volatility in the fashion and textile industry supply chain in recent years is set to continue as companies are particularly exposed to the so-called “bullwhip effect”: small changes in consumer demand have actually caused fluctuations growing and wide both upstream and downstream. The second point of focus is sustainability: the textile, clothing and fashion industries contribute significantly to global environmental pollution at every point in the supply chain. As ESG regulation becomes increasingly stringent, companies will face higher costs to access external sources of financing.


2024 is seen by industry players as a year of challenges and opportunities. In recent years, the automotive industry has been hit by the difficult macroeconomic context, with negative variables that have slowed down growth (delays in supplies, problems in logistics, significant increase in production costs, lower investment capacity on the part of consumers). The global automotive market is expected to continue its gradual recovery with 2024 where vehicle demand is expected to grow by 3%. In Italy, after the growth in registrations in 2023 (+19.3%), determined above all by the fulfillment of orders in previous years, an increase in sales of around 4% is expected in 2024. A particular focus is placed on the energy transition, but it is expected that full electric cars will represent only 4.2% of the total in Italy in 2024, with significant differences compared to other European countries.