In a phone interview, Som-lok Leung, IACPM's executive director, said even though many managers were heartened by the continuing evidence that the collapse of Silicon Valley Bank might not point to systemic deficiencies that caused the global financial crisis 15 years ago, there is still growing concern.
"The newest thing most acutely among regional banks in the U.S. is pressures on capital liquidity," Mr. Leung said, "and therefore less appetite to lend. I think we've heard a lot of anecdotes from our members that the pullback in providing credit is already happening, not just among regional banks."
Among surveyed managers, 84% said they believe a recession will occur in the U.S. before the end of 2023, while 61% see a recession in Europe and the U.K. by year-end. Managers see similar concerns in emerging markets countries but anticipate delayed impact due to the unique banking structures in those countries.
When asked how corporate credit default rates will move over the course of the next 12 months, 86% of surveyed North American managers said defaults will increase during the upcoming period. Globally, 81% of managers made that projection, and it is the fourth straight quarter that at least 80% of managers have projected rising defaults over the upcoming 12 months.
The survey's Aggregate Credit Default Outlook index for the next 12 months fell to -87.1 in the fourth-quarter survey from -75.5 in the previous quarter. A negative number indicates credit conditions are expected to worsen, while positive numbers mean conditions are expected to improve.
By region, Europe's Aggregate Credit Default Outlook index was the most dire due to its continuing proximity to the crisis in Ukraine, at -91.2, down from -84.4 three months earlier. North America's index fell less precipitously to -86.5 from -84.4, while pessimism is less stark in Asia and Australia, which chalked up indexes of -66.7 and -60, respectively, compared with their respective indexes of -59.1% and -64.7 the previous quarter.
The survey is conducted among IACPM members, who are credit portfolio managers at more than 130 financial institutions in the U.S., Europe, Asia, Africa and Australia.
