Auto Listed Among Least Risky Sectors in Credit In North America,Emerging Asia

New research from Coface indicates that, at least in the area of credit-granting, the energy and automotive sectors appear to represent the lowest risk among 14 major categories in North America. That is not the case in two other regions tracked.

The newfound US energy boom places in the “moderate risk” category, the lowest tracked by Coface’s “Panorama” publication. Also in the moderate risk was automotive, marking an improvement from the less-desirable “medium risk” territory it was in at last check with Coface. Economists working for the firm noted that auto sales have returned to pre-downturn numbers as consumers became increasingly less equipped to delay replacement of older cars and trucks with positive trends likely to continue.

Auto also tracked well, in the moderate risk category, in “Emerging Asia.” Also in the relatively safe category in that region were the pharmaceuticals, retrial, services and wood/paper sectors. Among the biggest concern there, as well as in North America and Western Europe, was the metals category. Metals was listed in the high risk or very high risk areas by Coface in all three, primarily because over-production out of China, among other Asian nations. This is creating a glut of supply, lowering prices and price stability in Asia while creating a huge competitive disadvantage for producers out of North America and Europe.

Western Europe had more than double the number of sectors in high risk or very high risk in the latest research period. Automotive and metals were among the riskiest, followed by sectors like chemicals, construction, electronics/IT, pharmaceuticals and wood/paper.

- Brian Shappell, CBA, CICP, NACM staff writer

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