Credit managers’ sentiment turns negative – report

NEW YORK, July 19 (BestGrowthStock) – International credit
portfolio managers’ sentiment turned negative in the second
quarter amid worries economic growth will suffer as governments
cut spending, according to a survey released on Monday.

The survey by the International Association of Credit
Portfolio Managers contrasts with strongly positive sentiment
found in the previous survey, conducted at the end of March,
according to IACPM.

“Longer term is another matter, but in the short run, many
of our members are concerned about economic conditions as
governments cut back on spending to fight rising deficits,”
Som-lok Leung, IACPM’S executive director, said in the
statement. “They’re worried economic growth isn’t strong enough
to survive a pullback.”
(See http://link.reuters.com/duk97m for Reuters TV segment)

Concerns about a double-dip recession may be surfacing as
governments in the Group of 20 major industrialized and
developing economies attempt to cut deficits and stabilize debt
loads, IACPM said.

Survey respondents also were concerned about a possible
sovereign default and potential fallout on the euro and
confidence, Leung said.

IACPM surveys its members at the end of every quarter.
Members are credit portfolio managers at 88 banks and financial
institutions in the United States, Europe and Asia.

Results are reported as index values ranging from 100 to
-100. Positive numbers reflect expectations for improvement in
credit conditions (fewer defaults and narrower yield spreads)
while negative numbers reflect expectations for worsening
conditions.

Respondents in the latest survey said they believe credit
spreads will widen over the next three months and had a
slightly negative outlook for defaults over the next 12
months.

“In terms of defaults, portfolio managers are especially
concerned about problems in commercial real estate, resulting
in a negative 25.0 index reading,” IACPM said.

Respondents forecast rising defaults among consumers but
were modestly positive on the outlook for corporate defaults.

“The outlook for commercial real estate appears to be
particularly troubling,” Leung said. “Almost $600 billion of
debt needs to be retired or refinanced by 2013 and survey
respondents are worried that economic growth isn’t going to be
strong enough for borrowers to grow their way out of debt.”
Investment Basics

(Reporting by Dena Aubin; Editing by James Dalgleish)

Credit managers’ sentiment turns negative – report