Global credit conditions appear to be improving on the strength of continued economic growth and expansionary monetary policy, says Fitch Ratings in a report published on Tuesday.

Global rating outlooks are improving, the report says and, on balance, are less negative than at the start of the year.

This improving outlook for global credit quality is underpinned by years of loose monetary policy, including quantitative easing (QE) programs, the report says, coupled with the strongest world growth conditions since 2010.

“Looking ahead in the rating cycle, the most benign credit market conditions in modern history will gradually begin to normalize as central bank assistance is withdrawn and world growth peaks in 2018. This could begin to temper the otherwise upbeat rating outlook trend,” said Monica Insoll, managing director at Fitch, in a statement.

The unwinding of QE will pose challenges to both borrowers and lenders, according to the report. “With a number of markets appearing to be approaching cyclical peaks, it may also expose potential asset bubbles, including those in buoyant housing markets such as Australia, Canada and some Nordic countries,” it says.

Other risks to the rating outlook include U.S. policy uncertainty and the potential for trade protectionism to develop, along with political instability and corruption in Latin America, notably Brazil. As well, the focus on controlling credit and shadow banking in China “raises the potential for policy mistakes, which could have unforeseen negative consequences such as undermining investor sentiment,” the report says.

The greatest improvement in credit outlooks so far this year has been in sovereigns, particularly in developed countries that are seeing improving fundamentals, the report notes.

At the same time, the outlook for corporates and financial institutions are also modestly improving, the report says, with net outlooks becoming less negative in both developed and emerging markets.