Two-thirds of credit portfolio managers feel corporate credit defaults will fall or remain unchanged over the next 12 months, according to the second-quarter survey from the International Association of Credit Portfolio Managers.
The liquidity provided by government stimulus over the past year has resulted in a sea change in managers' outlooks, said Som-lok Leung, IACPM's executive director, in a phone interview.
"Things have been improving and notably improved relative to the last quarter," Mr. Leung said.
Globally, about a third of surveyed credit managers, 34%, forecast rising loan defaults over the next 12 months, down from 40% of managers that responded with that answer in the first quarter (and 61% in the fourth quarter).
The Aggregate Credit Default Outlook index for the next 12 months rose to 2.6 in the most recent survey, improving from -39.7 in the previous quarter (and -64.2 in the quarter before that). A negative number indicates credit conditions are expected to worsen, while positive numbers mean conditions are expected to improve.
By region, North America's number is in positive territory for the second quarter in a row with an index of 7.7, up from -16.7 three months earlier. In the fourth quarter, North America's number was -44.7.
Overall enthusiasm is slightly tempered by concerns about inflation, Mr. Leung said.
"One of the biggest questions is, 'What does inflation look like going forward?'" Mr. Leung said. "Is it transitory? Which seems to be a rough consensus now, but there's still not clarity, and I think that's one of the things that people are watching."
The index for Australia rose to 15.0 from neutral (0.0) the previous quarter, while Europe rose to 12.1 from -31.4 and Asia rose to 9.1 from -13.0.
The survey is conducted among IACPM members, which consist of credit portfolio managers at more than 100 financial institutions in the U.S., Europe, Asia, Africa and Australia.