Financial Professionals at AFP Conference say Credit Markets are Stabilising but Acknowledge Recession in US

On day two of its Annual Conference in LA yesterday, the Association of Financial Professionals (AFP) surveyed attendees on the current state of the short-term credit market. The survey generated 1,060 responses from survey respondents who are senior finance and treasury executives from a broad range of companies with annual revenues over US$500m.

Financial professionals believe that government action over the past three weeks have stabilised the credit markets. Over 1,000 attendees at the Annual Conference of the Association for Financial Professionals (AFP) indicated that various government action, including the US Treasury plan to purchase an equity stake in key financial institutions and guarantee money market funds, along with the Federal Reserve’s plan to purchase commercial paper, has improved the outlook for credit availability.

“While the economy appears to be shaken, credit looks to be stabilising,” said Jim Kaitz, president and CEO of AFP. “More than three weeks ago, we said that the most pressing issue for business is access to credit. Actions by policymakers have in recent days brought some measure of confidence back to the markets.”

Survey respondents indicate overwhelmingly (97%) that they think the US economy is in recession. One third (34%) believe that the recent turmoil in the credit markets precipitated the recession, while nearly two-thirds (63%) believe that the US was already in recession prior to September’s events.

Despite belief that access to credit has stabilised in the last two weeks (75%), many companies are still experiencing difficulties. More than one quarter (25%) report that their access to new or additional short-term credit is very limited. A nearly similar percentage of survey respondents (22%) report that the tight credit markets over the past month have stalled growth opportunities.

Overall, financial professionals are more positive about the outlook for short-term credit.

  • 69% indicate that the US Treasury’s purchase of preferred shares in US financial institutions will improve corporate access to short-term credit.
  • 81% cite the Federal Reserve’s plan to purchase commercial paper and guarantee money market funds as improving access.

The recent government actions have led some organisations to be more comfortable in investing outside of ultra-safe Treasury securities. Thirty-one per cent of survey respondents indicate that they are more comfortable with re-allocating at least some of their short-term investment portfolio into other high-quality investment vehicles that offer higher item…


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