Fitch EU senior fixed-income investor survey shows most favour fiscal union

LONDON | Ratings agency Fitch released on Monday the conclusions of its latest survey of the opinions of a hundred fixed-income asset managers with an estimated $7.2-trillion business volume. More than 80% of respondents work at the top 20 and 50 investing houses in Europe, so their views on the euro zone’s future are meant to be telling.

And they are: fiscal integration is seen as the final station of the euro mess trip, but only by a very slim majority. The more times goes by in vain, the less credibility seems to be attached to any calls by the European Central Bank and Berlin that authorities will do whatever it takes to save the common currency.

These are the figures, and some charts.

34% of investors expect the Eurozone end-game is fiscal union but many fear peripheral country exits, sovereign debt defaults and even wide-scale break-up.

80% are concerned that the risk of a double dip recession is high –the highest recording to date, up from 68% in the last survey.

53% believe fundamental credit conditions for banks will deteriorate –an all-time-high, up from 45% in Q212 and 38% in Q112, and level with the 51-53% in Q411 and Q311, indicating the end of the temporary ECB’s liquidity facility relief.

82% say banks will need another ECB’s liquidity intervention within the next two years.

24% think banks face the most difficult refinancing challenge, up from 13% in April and 22% in January, but lower than the 49% in October –although sovereigns continue to be the main concern.

38% say lending standards for speculative grade companies will tighten further, reversing the more optimistic trend of the last two quarters.

21% vote high yields as their most favoured investment choice, ensuring this sector holds on to the top spot from the last quarter.

67% express concern over reduced corporate bond market liquidity and say it affects their market behaviour in several ways.

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