Forefront Communications

Pensions & Investments: Credit Managers Still Expect More Defaults, But European Optimism Grows

Mark Dowd

Mark Dowd

Credit portfolio managers believe rates and defaults will increase during 2018 with the realization that global central banks’ quantitative easing will end at some point, according to the fourth-quarter survey from the International Association of Credit Portfolio Managers, IACPM.

The Credit Default Outlook index globally for the next 12 months is -30.3, up slightly from -36.3 in the previous quarter’s 12-month survey. A negative number indicates credit conditions are expected to worsen, while positive numbers mean conditions are expected to improve.

Compared to the previous quarter, pessimism grew for Australian corporate credit, whose credit default outlook index dropped to -29.4 from -22.2 the previous quarter. Other regions showed improvement from the prior quarter, although pessimism still reigns. The European corporate outlook index rose to -8.8 from -21.9, while North America rose to -26.5 from -41.7, and Asia to -42.1 from -47.8.

Europe’s near-neutral rating, according to an IACPM news release, reflects the central bank’s ongoing quantitative easing.

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