Investment portfolio managers are evenly split on the outlook for North American credit spreads, according to a quarterly survey from the International Association of Credit Portfolio Managers.

The survey indicates that 55% of credit portfolio managers expect investment-grade spreads to remain unchanged and 48% think the same of high-yield spreads.

Of those who do see movement in investment-grade credit spreads, 31% project them to widen; only 14% expect them to narrow. For high-yield, the split is 34% seeing widening spreads and 17% see narrower spreads.

Just as the stock market continued to confound investors by rising despite geopolitical risks, most investors seem to be “throwing the towel” when trying to project credit market directions, said Som-lok Leung, executive director of the IACP.

“It’s hard to know when things will turn; they must,” said Leung, in an interview with Asset Securitization Report. “But defaults have been so low for so long, and certainly part of that is linked to very low interest rates and central bank actions. It’s hard to predict when it will turn.”

The survey results created the narrowest divide on the up-or-down direction of spreads in more than a year on the IACPM’s diffusion index – a negative (-) 17.2 for both high yield and investment grade assets.

The index [ranging from +100 to (-) 100]scores responses on the predicted directions on the spreads, with negative numbers denoting a greater consensus for deteriorating credit conditions. A “zero” on the index indicates no change is expected, while positive numbers point to improving credit conditions.

In the IACPM’s previous survey in June, the credit index was at a negative (-)25 for investment-grade and negative (-)37.5 for high-yield.

In Europe, the expectations for credit spreads worsened since the previous poll. The (-)14.8 reading on the three-month spread index is widened from the “0.0” reading in June indicating no expectations for changes in investment-grade credit conditions.

Credit portfolio managers see some increases in both global and North American defaults over the next 12 months. While 51% of respondents see no changes in the global default rate over the next 12 months, 41% see them rising and only 7% see a decline ahead defaults worldwide.

For North American corporates, 53% of managers expect a wider number of defaults compared to 11% seeing a decline, while 36% predict no changes.

The IACPM 12-month worldwide credit default index is at (-) 33.9, the widest negative number since the index was at (-)50.0 in last year’s third-quarter polling. The (-) 41.7 negative reading for NA firms is also the widest since last September’s (-)55.3 reading.

A smaller number of managers expect to see more European defaults: 66% see no change, and only 28% see a potential increase. The IACPM default index shows (-)21.9 for European corporate outlook, compared to (-)30.3 this summer and (-)45.2 last September.

Credit portfolio managers have been projecting worsening credit conditions for the past two years, and the default index outlook has been “in the red” since December 2013, according to Leung.

Most of those figures were not a result of concerns over economic downturns, but the reality of a low-rate, zero-default environment in which the market has had nowhere to go but down, he said. But the indications of stability in the current numbers also appear to bely the potential macroeconomic disruptions from rising risks in geopolitical events (North Korea, Iran, even the Catalonian referendum on independence from Spain), he said.

“There are certainly major concerns but Brexit, to take one issue, is a moving target and we’re not seeing much movement at the moment,” Leung said, in a statement prior to the release of the survey on Thursday.

The IACPM survey is a polling of more than 90 financial institutions in 20 countries, including portfolio managers at many large commercial banks, investment banks, insurance companies and asset managers.

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