Fitch Ratings' European Senior Credit Investor Survey for March 2009 shows a minor calming of investors' negative risk perceptions. 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.

"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. This time, no investors believed that they would deteriorate significantly and 46% believed 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.

In most structured finance asset classes, fewer investors believe that fundamental credit conditions will deteriorate as sharply as in December. For example, asset backed securities' conditions were anticipated to deteriorate significantly or somewhat by 73% a few months ago, but by 53% now. The percentage of investors believing that conditions will remain unchanged in this asset class is now 36% against 24% in December. Similar patterns are shown by the survey for RMBS, CMBS and CDOs. In all of those asset classes 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. In these cases investors believed there was a high degree of risk posed by these factors. None of these areas received such a high risk assessment this time. The area of greatest "high" risk now is the availability of global liquidity, with 40% of investors perceiving this.

Fitch has extensively researched non financial corporate liquidity since September 2007. This research has consistently shown that the overwhelming majority of Fitch-rated corporates in the 'BBB' and lower rating categories have sufficient liquidity to service indebtedness until the end of 2010.