BLBG: Investors Judge Credit Markets Past Worst, Fitch Says
By Caroline Hyde and Anchalee Worrachate
Aug. 13 (Bloomberg) -- Most European investors believe credit markets are over the worst of the disruption caused by the deepest economic slump since World War II, according to a survey conducted by Fitch Ratings.
Almost three quarters of investors polled at the end of the second quarter thought the worst had past, up from 29 percent in the previous three-month period, Fitch said in a report today. Just 18 percent of money managers expect the economic slowdown in Europe’s emerging markets to last longer than two years, down from 55 percent in March, Fitch said.
“I share the view that we’ve seen the worst in terms of market disruption,” said Mickael Benhaim, head of global bonds at money managers Pictet & Cie Banquiers in Geneva. “Even from an economic standpoint we are stabilizing, albeit weakly.”
Europe’s economy barely shrank in the second quarter as Germany and France unexpectedly returned to growth, suggesting the region’s worst recession since World War II may be coming to an end. Yield spreads on investment-grade European corporate bonds have tightened, with the premium at 2.11 percentage points, compared with 4.34 percentage points as of the end of March, according to Merrill Lynch & Co. data.
Banks’ reluctance to lend and a lack of money in the financial system is a “high” risk to the market’s recovery for 27 percent of investors polled by Fitch, down from 40 percent at the end of the first quarter.
To contact the reporters on this story: Caroline Hyde in London chyde3@bloomberg.net; Anchalee Worrachate in London at aworrachate@bloomberg.net
