Latest IACPM Credit Outlook Survey Forecasts Rising Defaults and Wider Credit Spreads

85% Of Respondents Believe North American Defaults Will Rise Over The Next 12 Months

New York, NY – Survey respondents in the latest IACPM Credit Outlook Survey believe credit spreads will widen over the next three months and a substantial majority say credit defaults will rise over the next 12 months. The IACPM Major Markets Credit Spread Outlook Index is negative -38.0 in the latest reading, while the Aggregate Credit Default Index is minus -56.2. A majority of respondents believe corporate defaults will rise in every region of the world, with the exception of Europe, where 49% of respondents say defaults are headed higher.

“The US stock market has bounced back from the beginning of the year and the leveraged loan market at least has a pulse,” commented Som-lok Leung, Executive Director of the IACPM, “but global markets are still facing significant headwinds. US interest rates could rise in the near future, energy prices are better but still low, Asia remains murky and Europe is contending with Brexit. Clearly, there’s no shortage of problems.”

Underlying economic concerns are seen in every market segment covered by the survey, as well as every global region. Fifty eight percent of respondents expect defaults to increase in consumer and retail mortgage debt. Fifty four percent forecast higher defaults in commercial real estate and more than two thirds, 68%, think corporate defaults will rise over the next 12 months.

Globally, 85% of respondents expect corporate defaults to increase in North America. Just three percent expect them to drop. Seventy one percent forecast rising defaults in Asia and 67% think they’ll go up in Australia.

Interestingly, the sentiment is somewhat less pronounced in Europe. While 49% of respondents expect corporate defaults to rise in Europe, 43% believe they will remain unchanged and nine percent say they will actually decline.

“The European corporate debt market is benefiting from the ECB’s Quantitative Easing program and also the fact that investors are chasing the same loans,” noted Mr. Leung. “Beyond this, however, there are still concerns over the possibility the British electorate will vote to leave the European Union, as well as general concerns about the strength of the economy.

”The 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 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.


The IACPM, with over 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 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.