Credit Managers See Signs Of Stability

The International Association of Credit Portfolio Managers conducts a quarterly survey of credit managers at 94 financial institutions in 17 countries. It is a good indicator of how the pros are positioned and their outlook for the economy. The survey indicates that credit managers are slightly more optimistic about the economy and expect credit spreads to tighten From the IACPM:
The latest IACPM Credit Outlook Survey has turned positive for the third quarter, as respondents forecast fewer defaults over the next 12 months and tighter credit spreads over the next three months. The IACPM Credit Default Outlook Index is positive 14.8, while the IACPM Credit Spread Outlook Index is positive 20.9. Both results are in contrast to last quarter, when survey respondents forecast somewhat higher defaults and wider credit spreads.

IACPM Executive Director Som-lok Leung cautions, however, that respondents may not be predicting significantly better conditions so much as not expecting trends to get worse. “Stability appears to be the key for a number of the survey takers,” commented Mr. Leung. “They’re not expecting a lot of improvement but they believe conditions have at least stabilized, if at more subdued levels.”
The latest forecast results are clearly positive but perhaps hint at an element of uncertainly, as survey respondents are generally split between those who believe conditions will improve in coming months and those who see no change. For example, 44 percent of respondents forecast a decline in corporate defaults, while 39 percent expect them to remain at current levels. Just 17 percent, however, think corporate defaults will increase. Similarly, 41 percent of respondents predict consumer defaults will drop, 35 percent expect no change and 24 percent think they will increase.


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