Fitch Says Australian Investors Are Cautiously Optimistic Despite External Risks

Tue Apr 1, 2014 6:00pm EDT

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(The following statement was released by the rating agency) Link to Fitch Ratings' Report: Australian Fixed-Income Investor Survey 2014: Cautious Optimism Prevails Despite External Risks here SYDNEY, April 01 (Fitch) Fitch Ratings has announced the results of its inaugural Australian fixed-income investor survey, undertaken in partnership with KangaNews, a specialist publishing house that provides commentary on fixed income markets in Australia and New Zealand. An overview of the findings will be presented at tomorrow's Fitch Australia Conference (see website for details). This survey is unique in the Australian context, reflecting the partners' strong ties with the local investor community. The survey's results show that investors are mindful of several external risks, but expect economic conditions to support a mild improvement in credit across 2014. A hard landing in China came top of a list of risks posed to the Australian credit markets, with a third of respondents ranking it as a high risk. Financial stability in the Eurozone also ranked highly. However, a majority of investors (67%) felt stability was sustainable over the next 12 months. More than 75% of investors surveyed expected fundamental credit conditions to remain stable or improve despite external risks, with 86% indicating they will maintain or add credit over the next 12 months. Respondents expect house price growth to moderate over the next three years, although they remain bullish for 2014 with 53% expecting rises of between 5% and 10%. Consistent with this view, around 80% of investors see the Australian unemployment rate rising to no more than 6.5% over the next two years. The majority of investors surveyed believe corporate balance sheets will become less defensive over the next 12 months, while more than 70% expect bank lending conditions to loosen moderately in the corporate and retail sectors. Fitch has previously flagged looser underwriting criteria as a rating sensitivity. Fitch's 2014 survey was conducted between 1 and 28 February 2014 and represents the views of managers of an estimated AUD180bn of fixed income assets, three-quarters of the Australian domestic real-money market. The full survey is available on www.fitchratings.com or by clicking on the link above. Contacts: John Miles Head of Fitch Australia Pty Ltd +61 2 8256 0344 Fitch Australia Pty Ltd., Level 15, 77 King St, Sydney, NSW 2000 Media Relations: Iselle Gonzalez, Sydney, Tel: +61 2 8256 0326, Email: iselle.gonzalez@fitchratings.com. Additional information is available at www.fitchratings.com. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S FREE WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Fitch Australia Pty Ltd holds an Australian financial services licence (AFS licence no. 337123) which authorises it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001.

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