Category Archives: IACPM

Credit Outlook Survey Forecasts More Difficult Credit Conditions

Respondents to IACPM’s latest Credit Outlook survey note a certain amount of complacency that has settled into the financial markets: Credit spreads are tight and there is little or no risk premium, even while markets confront a number of challenging issues.

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Survey Forecasts Rising Defaults, Wider Spreads Amid Concerns Over China, Energy, Interest Rates, Europe And US Election

The International Association of Credit Portfolio Managers has released its quarterly Credit Outlook Survey.

Survey respondents expect wider credit spreads in the short term and rising defaults longer term, citing a lengthy list of troubling possibilities: slower Chinese growth, more trouble in the energy patch, possible next steps or not by the Federal Reserve and other central banks, Brexit and the upcoming US elections.

While survey respondents don’t believe everything will turn out badly, they are focused on whether we will be able to continue staying the current course or see a downturn in one or more macroeconomic issues. Read more

IACPM Publishes Principles and Practices: 2015 Expanding Role of Credit Portfolio Management

IACPM has published a White Paper on the findings of its 2015 biennial Principles and Practices in CPM member survey. This was the fifth time that the IACPM conducted this study; 61 IACPM member firms participated.

Principles and Practices: 2015 – Expanding Role of Credit Portfolio Management

Credit defaults most likely to occur in Asia, IACPM survey finds

View Of Credit Spreads Closer To Neutral

New York, NY – Respondents to the latest IACPM Credit Outlook Survey continue to forecast rising credit defaults over the next 12 months in every category of debt tracked by the survey and in every region of the world, just as they have every quarter since the second quarter in 2014 when respondents were neutral on their outlook for European corporate debt. The IACPM Aggregate Credit Default Outlook Index is negative -31.4, relatively unchanged from last quarter’s minus -34.6.

“The threat of rising defaults has been with us for some time” commented Som-lok Leung, the Executive Director of the IACPM. “Recently, we’ve seen a greater number of downgrades from the rating agencies and some transactions have been affected but, all things considered, not that many, nor has liquidity dried up in any meaningful way. The real question is what happens when interest rates rise. How extensive will be the impact?”

Indeed, even as survey respondents continue to be concerned about the prospect of rising defaults, their outlook for credit spreads over the next three months is decidedly mixed, with large numbers of respondents on both sides of the question: will spreads widen or tighten? The Aggregate Credit Spread Outlook Index is negative -7.0 which is considerably closer to neutral than last quarter’s reading of minus -45.2 which meant at that time significantly more respondents believed spreads would widen rather tighten.

“It’s possible we’re reaching an inflection point,” noted Mr. Leung. “Respondents aren’t so much worried about a downturn as much as they think economic expansion will slow down. Credits on the fringe, such as high yield energy companies, could be in for a rough patch, while other credits, such as investment grade debt, may not be as impacted.”

The credit outlook survey is conducted among members of the International Association of Credit Portfolio Managers, which is an association of credit portfolio managers at 103 financial institutions located in 17 countries in the U.S., Europe, Asia, Africa and Australia. Members include portfolio managers at many of the world’s largest commercial banks, investment banks and insurance companies, as well as a number of asset managers. Members are surveyed at the end of each quarter. The latest survey was conducted September 29 to October 12.

Survey results are calculated as diffusion indexes, which show positive and negative values ranging from 100 to minus -100, as well as no change which is in the middle of the scale and is recorded as “0.0.” Positive numbers signify an expectation for improved credit conditions, specifically fewer defaults and narrower spreads, while negative numbers indicate an expectation of deterioration with higher defaults and wider spreads.

Please click here to access a selection of aggregated survey data.

 

IACPM Chairman Jeffery Weaver examines the credit landscape for 2015

With an eye on what lies ahead for the industry in 2015, SmartBrief conducted an e-mail interview with Jeffery Weaver, Chairman of the International Association of Credit Portfolio Managers. Mr. Weaver is an Executive Vice President and Group Head of CPM at KeyCorp.

The role of Credit Portfolio Managers in the management of credit exposures has evolved since the end of the Great Recession and one of the most significant changes is the expansion of regulation. How has this heightened regulatory scrutiny changed the role of risk management?

The role of credit portfolio management has become more strategic to the firm as the perpetual assessment of emerging risks and their potential impact on the credit portfolio is under taken.

 

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Latest IACPM Credit Outlook Survey Forecasts Benign Credit Spreads

But Growing Concern For Rising Credit Defaults, Especially Outside US

     New York, NY – The latest IACPM Credit Outlook Survey forecasts unchanged credit spreads over the next three months but, at the same time, also reveals concern about potentially rising credit defaults over the next twelve months, especially outside of the United States. The IACPM Credit Spread Outlook Index is 4.4, or nearly neutral in the newest reading, compared to an index value of 8.5 in the previous quarter. The IACPM Credit Default Index, however, is minus -28.0 versus negative -18.6 previously.

Survey respondents say concern is rising over potential defaults because the current economic expansion has lasted for an unusually long period, almost six years in the US. At some point, the expansion has to come to an end. For the short term, how-ever, central banks are underpinning economies globally by keeping interest rates at nearly historic lows, thus keeping credit spreads at current tight levels.

Longer term, there are certainly tensions, the Middle East, Ukraine, economic malaise in Europe, commented Som-lok Leung, Executive Director of the IACPM, but none of these are strong enough or deep enough to mark the current period as inflection point upon which portfolio managers would need to substantially change their positions.

To be sure, there are significant differences globally. The outlook for rising defaults in Europe changed from 0.0, or neutral, at the end of June to minus -22.0 in the new survey. The index for Asia moved from minus -25.0 in June to negative -40.0 this time. Australia declined from minus -17.4 in the previous survey to minus -43.5. The outlook for the US, however, remains roughly the same. The Credit Default Index for the US was negative -20.0 in the latest survey compared to minus -23.9 in the previous one.

The big question facing portfolio managers and investors in general is when will the US Federal Reserve raise interest rates, noted Mr. Leung. Economic expansion is long in the tooth. At some point, the Fed will raise rates, creating a new paradigm. Until then, however, credit conditions remain at extremely benign levels and the outlook for defaults is generally unchanged.

The credit outlook survey is conducted among members of the International Association of Credit Portfolio Managers, which is an association of credit portfolio managers at 102 financial institutions located in 17 countries in the U.S., Europe, Asia, Africa and Australia. Members include portfolio managers at many of the world’s largest commercial banks, investment banks and insurance companies, as well as a number of asset managers. Members are surveyed at the beginning of each quarter.

Survey results are calculated as diffusion indexes, which show positive and negative values ranging from 100 to minus -100, as well as no change which is in the middle of the scale and is recorded as “0.0.” Positive numbers signify an expectation for improved credit conditions, specifically fewer defaults and narrower spreads, while negative numbers indicate an expectation of deterioration with higher defaults and wider spreads.

 

Please click here to access a selection of aggregated survey data.

The full aggregated survey results will be published with a 6 months time lag in the members only section of our website. Please click here to access prior quarters’ survey results.

About IACPM

The IACPM, with 102 member institutions located in 17 countries, is a professional association dedicated to the advancement of credit portfolio management. Founded in 2001, the organization’s programs of meetings, studies, research and collaboration are designed to increase awareness of the value and function of credit portfolio management among financial markets worldwide, and to discuss and resolve issues of common interest to its members.

 

IACPM survey reveals optimism for fewer corporate defaults

The outlook for corporate defaults has switched to positive — meaning less risk — from negative in the latest IACPM Credit Outlook Survey. And improvement is being registered worldwide amid forecasts of an improving global economy this year. In addition, “if you look at the bank earnings releases in the last week or so, a lot of them cite that credit quality is improving,” said Som-lok Leung, New York-based executive director of the IACPM. Reuters(1/16), Pensions & Investments (free access for SmartBrief readers) (1/16), Bloomberg (1/16)

Please click here to access a selection of aggregated survey data.

The full aggregated survey results will be published with a 6 months time lag in the members only section of our website. Please click here to access prior quarters’ survey results.

 See full article from IACPM website here : http://www.iacpm.org/news/detail.dot?id=56202