ANCHOR QUESTION OFF-CAMERA (ENGLISH) SAYING:

Interest rates are rising, and that means possibly curtailment in refis. So isn't that a concern for investors?

SOM-LOK LEUNG, EXEC. DIR., INTL. ASSOCIATION OF CREDIT PORTFOLIO MANAGERS (ENGLISH) SAYING:

Yeah, that is a countervailing effect but I think one of the reasons the Fed has decided to pull back its quantitative easing through the taper process is because they believe that the strength in economic growth will counteract that. So absolutely, if interest rates go up, borrowing cost will increase. And often, the weakest companies will find stress from that. But if the economy is improving enough that will hopefully counteract that.

ANCHOR QUESTION OFF-CAMERA (ENGLISH) SAYING:

Alright. But- yeah, overall improvement defaults. But in terms of the outlook for a commercial real estate, they're better off than consumer mortgages. And that leads you to think, is that a concern given the huge run-ups that we've seen in home prices and also demand for homes at this current state- the way that that default risk is valued?

SOM-LOK LEUNG, EXEC. DIR., INTL. ASSOCIATION OF CREDIT PORTFOLIO MANAGERS (ENGLISH) SAYING:

Well, real estate is tough to call always. It's a long cycle asset. You make your decisions and then it's only a couple of years later before you have the building and you start collecting rents or you start to- you sell the house or whatnot. So it is- there's certainly still uncertainty in that. There are still a lot of adjustments still being made post 2008 crisis. But I think the general consensus is much more positive.

ANCHOR QUESTION OFF-CAMERA (ENGLISH) SAYING:

But the short-term outlook for credit spreads, according to your survey, they're neutral. That's sort of rare. Why is it especially given that we've seen an improvement in the global business?

SOM-LOK LEUNG, EXEC. DIR., INTL. ASSOCIATION OF CREDIT PORTFOLIO MANAGERS (ENGLISH) SAYING:

Well, the view of spreads versus defaults is very different. Now, we think of default as really the underlying mechanics- the underlying economics of the credit quality and companies. Spreads are affected by many different things in addition to the fundamentals - liquidity, overall appetite for risk which bounces up and down, short-term fears and short-term events before they're fully absorbed into things. So I think what this is telling us is that longer term through the 12-month timeframe, the fundamentals look much better than the other technical effects that could impact spreads in the near term, so things like liquidity and also things like central bank actions are definitely going to affect the near-term view.