Monthly Credit Outlook: May 2023
The March Monthly Credit Outlook looks at recent credit trends and highlights seen in the consensus dataset. This month, stubborn inflation risks steeper global credit deterioration.
May 3, 2023
The March Monthly Credit Outlook looks at recent credit trends and highlights seen in the consensus dataset. This month, stubborn inflation risks steeper global credit deterioration.
Consensus credit data can fill CDS market gaps for CVA calculations. This insight links real-world PDs to “Synthetic CDS” estimates for unrated, private counterparts.
The latest whitepaper from Credit Benchmark illustrates global credit trends in the first quarter of 2023. The credit optimism of early 2023 has faded with the latest data suggesting a gradual but broad decline in global credit. US regional banks have shown extensive deterioration, though negative movement has paused for their larger counterparts. Global REITs, Mutual Funds, Hedge Funds, US Technology and Telecomms all showing net deterioration.
Recent bank failures and mergers have uncovered transatlantic tensions in the global banking sector. This data at a glance looks at US and EU Banks sectors. Average default risk for US Banks deteriorated for much of H2 2022 ahead of recent volatility. EU Banks default risk has been steadily improving.
Investors in credit portfolios make extensive use of credit agency ratings and market-driven risk models. But some segments are faced with less visibility and a lack of public ratings, while credit portfolio management models are only as good as the credit risk data available to them. This paper reviews a data-driven framework for portfolio risk analysis and discusses practical applications of consensus credit risk estimates.
Bail-in bonds are a powerful extra prop for bank balance sheets in times of turmoil: AT1 bond issuers showed faster post-COVID credit recovery than most Global Systematically Important Banks, and the gap continues to widen.
The sudden collapse of Silicon Valley Bank has raised questions as to what warning signs were missed. While this may have been a black swan event, bank credit warning signs have been flashing in consensus credit data for the past few months.
The March Monthly Credit Outlook looks at recent credit trends and highlights seen in the consensus dataset. This month, stubborn inflation risks steeper global credit deterioration.
Global Corporates have returned to a negative credit balance, ending their 19-month positive run. Global Financials have now had four months without a positive credit balance. This negative shift is being driven by a number of Global Sectors.
3G has been a major legacy network overhead and consumer of spectrum bandwidth in the US. But as 5G moves into high gear the Big 3 wireless carriers needed to reallocate capacity to fully support the 5G network, and free up resource for the development of 6G and beyond. With the 3G burden removed, the sector’s Big 3 are better placed to invest in future technologies with less strain on balance sheets.
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Credit Benchmark brings together internal credit risk views from over 40 leading global financial institutions. The contributions are anonymized, aggregated, and published in the form of consensus ratings and aggregate analytics to provide an independent, real-world perspective of credit risk. Risk and investment professionals at banks, insurance companies, asset managers and other financial firms use the data for insights into the unrated, monitoring and alerting within their portfolios, benchmarking, assessing and analyzing trends, and fulfilling regulatory requirements and capital.
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