The risk of a global recession has surged to the top of the worry list for credit investors even as they push down their cash balances to snap up new-year issuance, according to Bank of America Merrill Lynch's latest survey of European money managers.

Almost 30 per cent of respondents to the bank's poll cited a worldwide economic slump as their largest concern, the strongest consensus for any single risk since June 2017. No one cited rising bond yields or higher inflation as their top worry, while only 2 per cent said it was Brexit, according to analysts led by Barnaby Martin.

European investors have been piling into credit so far this year, adding corporate hybrids, insurance and subordinated bank debt alongside defensive positions in utilities, according to BAML. That's pushed cash allocations down to 3.5 per cent and left a majority of investment-grade money managers feeling that spreads are too tight, the bank said.

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Investors are also sceptical that another round of cheap central bank funding for European lenders from the ECB will provide much of a boost - they reckon the policy has been so well signalled that it's now priced in. Even so, almost a quarter of respondents expect tighter senior bank spreads as a result.

About 40 per cent of clients argue that stimulus in China is key to getting the eurozone out of trouble by supporting German exports. The Asian nation made its biggest-ever monthly liquidity injection into the economy in January, but its impact is questionable because of debt levels in China, according to the analysts.

BAML polls clients including banks, insurance companies, pension funds, asset managers and hedge funds every two months for its credit investor survey. There were 58 participants in the latest edition.

These fears come off the back of a report out of the US, showing that seven million Americans are 90 days or more behind on their auto loan payments - a figure, which was even high that during the wake of the financial crisis era.

Economists warn this is a red flag. Despite the strong economy and low unemployment rate, many Americans are struggling to pay their bills.

Americans have fallen behind on their car loan repayments. Photo/Getty Images.
Americans have fallen behind on their car loan repayments. Photo/Getty Images.

"The substantial and growing number of distressed borrowers suggests that not all Americans have benefited from the strong labour market," economists at the New York Fed wrote in a blog post.

A car loan is typically the first payment people make because a vehicle is critical to get to work and someone can live in a car if all else fails. When car loan delinquencies rise, it's a sign of significant duress among low-income and working class Americans.

People who are three months or more behind on their car payments often lose their vehicle, making it even more difficult to get to work, the doctor or other critical places.

There are also growing concerns regarding credit in New Zealand, with high house prices adding pressure on Kiwis at a time when wages have stagnated.

A report out today showed that Auckland's first-home buyers will need to fork out up to $950 per week in loan repayments for the next 30 years based on what they're paying to get a foothold in the market.

This leaves little financial room to move should the family fall on tougher times.

- Bloomberg