Credit Outlook Sharply Improves in Europe While Declining in North America in Latest IACPM Credit Outlook Survey

Forecast For Asia Remains Negative

New York, NY – In a sharp reversal, the credit outlook for Europe significantly improved in the latest IACPM Credit Outlook survey, while the outlook for North America worsened. To be sure, the credit default outlook for European corporate debt remains modestly negative but is still considerably better than the reading taken in the last quarterly survey conducted at the end of last year. The Credit Default Index for European corporate securities improved from negative -31.4 to minus -10.0 in the latest survey.

“The results are a bit surprising considering Europe still faces structural problems like Greece’s future in the European Union,” commented Som-lok Leung, “but, at the same time, the Quantitative Easing program recently launched by the European Central Bank is clearly helping expectations.”

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 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.

While the outlook for Europe has improved, expectations for North America have slipped. The IACPM Credit Default Outlook Index for North American corporate debt declined in the latest survey from negative -24.4 in December to minus -38.6. The region has enjoyed one of the healthiest economies in the developed world in recent years but now faces several headwinds.

“It’s important to remember that the North American economy has performed relatively well and defaults are at an extremely low level,” said Mr. Leung, “so it’s not surprising that people think defaults will increase in the future. At the same time, though, survey respondents are specifically looking at the knock-on effect of lower oil prices and the expectation that the Fed will raise interest rates at some point this year.”

The outlook for credit spreads over the next three months show the same dichotomy between Europe and North America. The IACPM Credit Spread Outlook Index for European investment grade debt improved from negative -9.7 in December to positive 23.1 this time. In contrast, the IACPM Credit Spread Outlook Index for investment grade North American debt moved from positive 2.5 at the end of last year to minus -11.4.

“The outlook for credit spreads is probably reflective of the actions of global central banks,” said Mr. Leung. “The forecast for European spreads has improved in the face of Quantitative Easing, while the outlook for North American spreads is neutral or somewhat negative as market participants wait for the Fed’s next move on interest rates.”

The outlook for Asia did not change significantly in the latest survey, although it remains in negative territory. The forecast for Asian corporate defaults moved to negative -26.9 in the latest reading compared to minus -29.2 in December.


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 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.