Latest IACPM Credit Outlook Survey Reflects Wary Outlook

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

New York, NY – Where to start? Respondents to the latest IACPM Credit Outlook Survey cite 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 and, oh yes, Brexit and the upcoming US elections.

Given all this, it is no surprise survey respondents expect wider credit spreads in the short term and rising defaults longer term. The IACPM Credit Spread Outlook Index is minus -47.0 in the latest reading, while the IACPM Credit Default Outlook Index is negative -48.1. “While survey respondents, who are all members of the IACPM, 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,” commented Som-lok Leung, Executive Director of the International Association of Credit Portfolio Managers.

A majority of respondents see more difficult credit conditions in every category tracked by the IACPM survey. Fifty-seven percent of respondents expect wider credit spreads in North American investment grade debt, while 72% forecast wider spreads in European investment grade debt. Two thirds of respondents believe defaults will rise in North American corporate debt and 58% think European corporate credits will experience a higher default rate.

“Pretty much everyone is focused on macroeconomic issues and their institution’s exposure to risky assets,” said Mr. Leung. “Do they have enough liquidity? Do they have enough cash? And, if they have enough cash, what do they do with it? We’ve been muddling through but, clearly, most of the challenges are still with us.”

The Credit Outlook Survey is conducted among members of the IACPM, which is an association of credit portfolio managers at more than 90 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.

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.



The IACPM, with more than 90 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 col-laboration are designed to increase awareness of the value and function of credit portfolio management among financial markets worldwide, and to discuss and resolve is-sues of common interest to its members.