A survey conducted by the International Association of Credit Portfolio Managers (IACPM) showed that credit investors are considerably more optimistic than they were three months ago, when the last survey was conducted.
“Stability appears to be the key for a number of the survey takers,” said Som-lok Leung, executive director of the IACPM. “They’re not expecting a lot of improvement but they believe conditions have at least stabilized, if at more subdued levels.”
Participants in the survey, dubbed the Credit Outlook Index, are asked a simple question: Do you think spreads and/or defaults will go up, go down or stay the same? If more respondents say spreads will widen or defaults will increase, then the index heads in a negative direction starting from zero. If more respond positively, the numbers head the opposite direction. The index ranges from -100 to 100.
The overall credit spread outlook index for the third quarter was 20.9, compared with -20.1 for the second quarter of 2010.
“Financial markets thrive on certainty, and while market participants may or may not agree with all the new regulations, there is a growing sense of clarity which provides a firmer foundation for the future,” Leung said.
Survey respondents consist of 88 leading banks and financial institutions in 14 countries, according to the IACPM.