Fitch Ratings says that its European Senior Credit Investor Survey for the first quarter shows a minor reduction in investors’ perception of credit and other risks.

Although the recession is anticipated to last longer in some key regions, asset class conditions are viewed as slightly better by respondents to the latest edition of the quarterly survey, it notes. “Overall respondents are less pessimistic than in December 2008 and fundamental credit concerns have lessened, albeit to a minor degree,” says Trevor Pitman, Fitch’s regional credit officer for Europe and Asia.

In December, 90% of investors said that speculative grade corporate credit conditions would deteriorate significantly, but now only 46% believe that they will, with 29% believing they will deteriorate somewhat.

In the previous survey, 70% of investors believed that credit conditions for European financial institutions would deteriorate either significantly or somewhat. Now, no investors believe that they would deteriorate significantly and 46% believe some deterioration is possible.

An overwhelming majority of respondents are confident that major developed economy governments will fully support the senior debt obligations of all systemically important banks. Nearly 90% of investors believe this, Fitch reports.

In most structured finance asset classes, fewer investors believe that fundamental credit conditions will deteriorate as sharply as in December. A majority of investors still anticipate that conditions will worsen, but to a lesser degree than in December.

In December the factors which over 50% of investors suggested could pose risks to the European credit markets were hedge fund failures, housing market disruptions and lack of credit to corporates, and investors believed there was a high degree of risk posed by these factors. Fitch says that none of these areas received such a high risk assessment in the latest survey. The area of greatest “high” risk now is the availability of global liquidity, with 40% of investors perceiving this.

IE