A survey of portfolio and asset managers at more than 135 financial institutions in over 35 countries conducted by the International Association of Credit Portfolio Managers found that the economic credit outlook for 2024 has worsened. More than 50% of respondents said they think corporate defaults will pick up in North America, with 57% believing it will also be the case in Europe.
“Defaults have increased somewhat but, at the same time, consumers are nevertheless showing surprising resilience, perhaps because of continuing low unemployment or because they have affordable home mortgages with very low interest rates,” the IACPM said in a news release.
However, only a quarter of those surveyed believe that the North American region will enter a recession this year. Conversely, 37% said they think Europe will enter a recession, and nearly one-fifth said they think it already has entered a recession.
Survey respondents indicated they anticipate overall credit spreads to widen, though spreads are expected to tighten for investment grade corporates in North America.
“A number of our members believe spreads, after tightening considerably during the first three months of the year, are now where you would expect them to be given current economic and market cycles,” said IACPM Executive Director Som-lok Leung.
