Credit portfolio managers are forecasting rising global defaults and wider spreads, said the latest quarterly survey from the International Association of Credit Portfolio Managers.
The survey's Credit Spread Outlook index for the next three months was -45.2. At the end of the first quarter, the index was 1.8.
A negative number indicates credit conditions are expected to worsen, while positive numbers mean conditions are expected to improve.
The Credit Default Outlook index for the next 12 months was -34.6, down from -24.5 the previous quarter.
“As painful as the (Greek) crisis may be, certainly to Greek citizens, it doesn't pose the same kind of threat to the global financial system that Lehman did in 2008,” said Som-lok Leung, IACPM executive director, in a news release. “Survey respondents are far more worried today about the impact of potentially rising interest rates in the U.S. and the economic and financial market turmoil in China.”
The Credit Default Outlook index for Asian corporate debt was the worst, at -56.5, down from -26.9 the previous quarter.
Credit managers also feel more pessimism for North America than for Europe.
The index for North American corporate debt also fell, for the third quarter in a row, down to -48.7 from -38.6 the previous quarter. The European corporate debt index was also poor, at -30.6, down from -10 the previous quarter.
“(The greater pessimism) is not surprising since the threat of rising interest rates in the U.S. will have a significant impact on corporate debt,” Mr. Leung said in the news release.
IACPM is an association of credit portfolio managers at 102 financial institutions in the U.S., Europe, Asia, Africa and Australia.