(Repeat for additional subscribers)
Feb 17 (The following statement was released by the rating agency)
Results from Fitch Ratings' 1Q14 European fixed
income investor survey show that investors are more bullish on eurozone
fundamentals. Only around one-third are concerned about a prolonged recession
derailing credit markets - the lowest reading in almost three years. Only
one-quarter said fundamentals would worsen for developed market sovereigns, down
sharply since October. Nevertheless, deflation concerns have risen to their
highest level since 2010.
Survey respondents also feel that monetary tightening will be well-managed. A
large majority (78%) of investors believe central banks will raise rates in a
smooth and timely manner, without threatening economic recovery. This is despite
the volatility induced in emerging markets (EMs) by the Fed's tapering. The
level of confidence in central bank action has increased from the already high
level in our July survey.
Investor anxiety over EMs applies to sovereigns and corporates alike. Around 60%
of those polled believe fundamental credit conditions will deteriorate for both
segments. In addition, EM corporates is seen as the sector facing the greatest
refinancing challenge over the next 12 months by the largest number of
By contrast, the high-yield sector is the subject of the most bullish issuance
outlook and the second most optimistic expectations on spread tightening.
Respondents again voted high-yield their favourite marginal investment choice,
continuing its unchallenged preferred status since early 2013. However, a rising
share of respondents regard the asset class as overvalued.
Fitch's 1Q14 survey was conducted from 8 to 31 January. It represents the views
of managers of an estimated EUR5.9trn of fixed-income assets.
The full survey is available on www.fitchratings.com or by clicking on the link
A video summary of highlights from the survey is also available here
Link to Fitch Ratings' Report: European Senior Fixed-Income Investor Survey 1Q14