Dampened demand and rising costs have worsened the credit prospects of Asia-Pacific's auto, building materials, and capital goods sectors over the next 12 months, S&P Global Ratings said in recent releases.

For the auto sector, the rating agency forecasts global light-vehicle sales to drop by 2.5% annually in 2026, with major declines in China and the US.

China and Europe will see further electrification until 2027, while the US will observe a slowdown as the government eliminates incentives, S&P said.

Raw material costs will see notable increases amid high oil prices and narrow supply, but S&P's rated issuers will exhibit resilience amid stronger products, diversified networks, and scale gains.

The region's building materials sector faces increased transportation and energy costs due to the Middle East war, resulting in greater margin pressure, S&P said.

In China, the sector faces bottlenecks in demand recovery amid continued weakness in the property sector, according to the rating agency.

Still, satisfactory competitive positions and ample financial headroom should aid the companies in handling oversupply and dampened demand, S&P said.

Issuers from the capital goods sector will also face increased costs, supply chain disruptions, and postponed investments amid the Middle East conflict and volatile US policy, the rating agency said.

The sector faces margin pressure due to higher costs, but earnings should gain from strong order backlogs and staunch investment demand, according to S&P.

Robust earnings have improved the companies' financial buffers and bolstered their cushion against downside risks, S&P said.