Credit managers continue to expect credit defaults to rise over the next 12 months in most regions, said the latest quarterly survey from the International Association of Credit Portfolio Managers.
“The view on defaults is relatively unchanged, and I think that’s just a general sign that things have been very, very good for quite some time and the odds are that things will get worse rather than better,” said Som-lok Leung, IACPM executive director, in a telephone interview.
The Credit Default Outlook index for the next 12 months was -31.4, up from -34.6 the previous quarter. A negative number indicates credit conditions are expected to worsen, while positive numbers mean conditions are expected to improve.
Of all the regions, credit managers were decidedly most pessimistic about Asia. Its index is -70.4, down from -56.5. North America also saw a fall to -51.2 from -48.7, and Australia also dropped to -35 from -29.4.
Meanwhile, “Europe is … a tad bit better than the last time, but given recent central bank action in Europe and that housing seems to be leveling out there, that’s not too surprising,” Mr. Leung said.
Europe improved to -20 from -30.6.
Meanwhile, the survey’s Credit Spread Outlook index for the next three months was -7, up from -45.2 the previous quarter, with more managers believing spreads will widen rather than tighten.
IACPM is an association of credit portfolio managers at 103 financial institutions in the U.S., Europe, Asia, Africa and Australia.
