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Credit research poll 2002: Credit analysts get back to fundamentals

Interviews with the front-runners in this year's Euromoney credit poll indicate a market in flux and efforts on the part of credit research teams to adapt to this. At a time when equity activity is subdued, the credit market stands out as lively but also highly volatile throughout the rating spectrum. This means that the top firms are doing their best to find new ways of presenting research to their varied customer base. Timeliness, focus and independence in their reports are crucial but they must produce this with staffing levels that are generally substantially lower than those of their equity colleagues.

This should be the moment when banks' credit analysts, long the poor relations of their more celebrated colleagues on the equity trading floor, finally come into their own.

First, theirs is the market with all the momentum. The credit market in Europe has doubled in size since 1999. The asset class continues to grow - the 940 replies to Euromoney's credit poll this year, compared with 340 last, is testimony to this. In Europe in particular, new funds continue to be dedicated to credit investing at a time of shrinking primary market supply. That provides strong technical support, despite all the recent credit blow-ups, such as at Marconi and Swissair, and all the concerns that have swirled around Invensys, France Telecom, Sonera and others.

In 2001, a year when Argentina defaulted, Enron went bankrupt and downgrades outstripped upgrades by a record margin, credit still outperformed the equity markets.