| NEW YORK
NEW YORK Oct 13 Swirling uncertainties
including global economic growth, central bank policies, the US
elections and potential fallout from Britain's vote to exit the
EU will spur corporate debt defaults and wider credit spreads,
according to a quarterly International Association of Credit
Portfolio Managers (IACPM) survey.
Most managers polled are anticipating more difficult credit
conditions in every tracked category.
"Pretty much everyone is focused on macroeconomic issues and
their institution's exposure to risky assets," Som-lok Leung,
IACPM's executive director, said in a statement.
Demand for positive yields, amid a surge in global debt with
low or negative yields this year, has broadened the reach for
riskier asset classes where defaults are an increasing concern.
"Do they have enough liquidity? Do they have enough cash?
And if they have enough cash, what do they do with it?" are
among the widespread concerns, Leung said in a statement. "We've
been muddling through but, clearly, most of the challenges are
still with us."
The survey found that 57% of those polled expect credit
spreads to widen for North American investment-grade debt and
70% see wider spreads for North American high-yield debt.
For European debt, 72% forecast wider investment-grade
spreads, while 69% see wider spreads for high-yield spreads.
Two thirds of respondents see defaults rising for North
American corporate debt, similar to the share expecting higher
defaults for Asian corporate debt, while 58% expect higher
defaults for European companies.
The overall IACPM 12-Month Credit Default Outlook Index
continues to reflect widespread longer-term credit market
concerns after sinking to a nearly seven-year low of -56.2 in
the first quarter.
Negative numbers indicate expected credit deterioration with
higher defaults and wider spreads.
The default outlook index reading of -48.1 for the third
quarter indicates a more negative view than the -31.4 reading a
year ago, but is improved from -52.8 in the second quarter.
With credit spreads expected to widen in all regions in the
short term, the IACPM 3-month outlook index eroded to -47 in
the third quarter from -39.7 in the previous quarter.
This outlook for wider spreads was less dour in the third
quarter of last year, with the index at -7, before worsening
significantly and driving down the gauge to -55 during the
fourth quarter's heightened market volatility.
The last time the three-month spread outlook index was
positive was in the first quarter of 2013 and the last positive
reading on the 12-month default outlook index was in the fourth
quarter of 2014.
(Editing By Jon Methven)