IACPM Credit Outlook Survey Forecasts Wider Credit Spreads

New York, NY – Respondents to the International Association of Credit Portfolio Managers Second Quarter Credit Outlook Survey are forecasting wider credit spreads over the next three months and rising credit defaults over the next 12 months. The IACPM Major Market Credit Spread Outlook Index is a sharply negative -43.5 for the second quarter, indicating strong sentiment that spreads will widen over the next three months. The IACPM Aggregate Credit Default Outlook Index is negative -72.3.

Respondents also predicted wider spreads in the last survey taken three months ago at the end of the first quarter. Instead of widening, however, spreads tightened considerably. Many of the survey respondents, who are credit portfolio managers at leading financial institutions globally, believe the credit market rally over the last three months was technical in nature and is now overdone.

“Many of our members believe the market has overshot the underlying credit risks and is now due to pull back,” commented Som-lok Leung, Executive Director of the IACPM. “That’s also reflected in our survey results. Last time, wider spreads were predicted by an overall score of negative -19. That’s far less than the minus -43.5 we’re seeing now.”

The IACPM’s survey results are calculated as diffusion indexes, showing positive and negative values from positive 100 to negative 100, as well as no change which is recorded as ‘zero.’ Positive values signify an expectation for improving conditions, such as tighter spreads or fewer defaults, while negative values indicate an expectation of deteriorating conditions.

Survey respondents clearly believe credit defaults will continue to rise over the next 12 months, as reflected in the negative index score of -72.3 in the latest survey. Interestingly, though, the result is at least somewhat less negative than the almost unanimous forecast for rising defaults seen in the last quarter. The IACPM Credit Default Outlook Index in the first quarter was an overwhelmingly negative -95.3. In the quarterly survey before that, taken at the end of December 2008, the default index was also a strongly negative -90.7. This quarter’s result, taken at the beginning of this month, is the least negative reading since the IACPM began conducting the Outlook survey in December 2007.

“It is certainly premature to suggest portfolio managers are beginning to see the light at the end of the tunnel or that we’re even at the bottom,” said Mr. Leung. “However, I think a number of managers are beginning to believe that we can at least see the bottom. A small, but significant, number of respondents in this quarter’s survey believe the level of defaults will remain unchanged over the next 12 months.”

The IACPM conducts its quarterly survey among 80 member firms located in 14 countries in Europe, North America, Asia, Australia and Africa. Membership includes credit portfolio managers at commercial and investment banks, insurance companies and asset managers. The Association began its quarterly surveys in December 2007 because its members value knowing how their colleagues are assessing risk as they make their own risk management decisions. The IACPM also publicly releases the results because it believes other market participants will benefit from the collective views of professional credit portfolio managers.


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.



The IACPM, with 80 member institutions located in 14 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.