Equipping Credit Professionals for Tomorrow
Eugene Chiam / Article / 07 January, 2023
What Next for the Global Credit Markets?
The Global Financial Crisis was a watershed moment in the history of the credit markets, requiring as it did a massive amount of central bank support to avoid a complete collapse of the financial ecosystem. As the crisis receded, a new era of rapid expansion and change in the global credit markets began.
Over the last decade, the credit markets have embraced new technologies and new credit themes have emerged. The economic impact of geopolitical tensions and the rise of sustainable finance have become the two dominant credit themes of today. Meanwhile, the threat to businesses and governments posed by cybercrime continues to grow.
The Covid-19 pandemic has had a massive impact on the global economy and supply chains in many sectors remain disrupted. Credit professionals will be grappling with the impact of rapidly rising inflation in the near term. Making sense of how major global developments such as these will impact credit portfolios will continue to be a challenge.
Global Credit Megatrends
As credit professionals we spend a lot of time analyzing credit data and thinking about future trends in credit markets. As we look ahead today, we have identified six credit megatrends that credit professionals will need to think carefully about:
- The impact of what may be an uneven economic recovery from the pandemic
- Higher levels of sovereign and corporate debt will change credit risk profiles
- The digital transformation will gather pace
- There will be a repositioning of investment portfolios
- Sustainability will become a central issue
- There will be opportunities in Asia's credit markets
New Ways of Working
It goes without saying that credit professionals should have a solid grasp of credit fundamentals and a robust analytical framework in which to operate in order to critically assess the impact of events on the credit quality of portfolios and borrowers. The impact of the six megatrends will also require credit professionals to become more flexible. Those who are willing to adapt and develop their skill sets are likely to enjoy greater career success in the credit markets of the future. Perhaps the most fundamental area of change will be how the ongoing integration of ESG considerations into the credit industry's priorities and frameworks reshapes how the industry assesses credit risk. With so much regulatory focus on this area, and with the technological change that underpins much sustainable development happening so quickly, credit functions at financial institutions will be a fast-evolving environment. The good news for credit professionals is that new areas of specialization will open up, bringing new career opportunities.
Managing data effectively will become a bigger challenge as well. Credit professionals are being inundated with ever greater volumes and granularity of client data and market information. With so many stakeholders competing to provide information, a key challenge will be to distil this down into what's important, actionable and ultimately leads to better credit decisions being made.
We've all seen how the adoption of emerging technologies has been changing the workplace environment and how, and where, work actually gets done. The pandemic has forced companies to adapt and has accelerated fundamental changes in working-patterns. Nobody can be sure what the future workplace environment will look like, but it seems likely that credit professionals will need to be ready to embrace change.
The Global Credit Certificate Qualification
With change comes opportunity. Now, more than ever, credit professionals need to keep their credit analysis skills up-to-date. To satisfy the financial industry's need for a relevant and easily accessible learning solution, the Global Institute of Credit Professionals has launched the new Global Credit Certificate. The principal aim of the Global Credit Certificate is to help credit professionals to make better credit decisions. The program is designed to assist those who want to upgrade their core credit skills so that they can excel in today's challenging credit environment and advance their careers. The syllabus is wide-ranging, making this a study program suitable for those working in credit and related roles in most sectors of the financial industry. It consists of two levels, and encompasses two exams. It is a timely tool to help professionals prepare for changing credit conditions.
About The Author
Eugene Chiam has been a credit ratings analyst at Fitch Ratings in London since 2010. He joined the Sovereigns Group in 2012, covering sovereign ratings across Western Europe, Emerging Europe and Sub-Saharan Africa sovereign credits. Prior to joining the Sovereign Group, Eugene was an analyst for the Financial Institutions Group, where he published research analysis on banking sectors. He was also lead ratings analyst on several Supranational financial institutions in 2013-2015. Key highlights in his career included analyzing the creditworthiness of Azerbaijan and Armenia through the 2020 war, responding to bank failures in Andorra and San Marino, and removing the Negative Outlook on the United Kingdom's rating since “Brexit”. In 2021, Eugene was awarded Fitch Ratings' Analytical Contribution & Excellence (ACE) Award for his market-beating early recognition of the pandemic's impact on Cabo Verde's economy and credit ratings.