Europe

Having done its job of delivering lower volatility and better performance than mainstream bond markets in 2022, the income and defensive characteristics of European ABS look equally compelling in 2023, says Doug Charleston.

With commercial real estate seen to be in the eye of the storm as interest rates rise, Aza Teeuwen looks at the potential impact on CMBS and CRE loans and highlights where valuations could be most at risk.

European ABS is enjoying a spurt of new issuance and a parallel rally in spreads, with investors having entered the new year with cash to invest and buoyed by renewed hope around inflation and monetary policy, says Pauline Quirin.

With projections for European growth and inflation being hastily revised in early 2023, the region’s bonds are still paying investors a premium that may not be around for long, says Dillon Lancaster.

After shocking investors in November by floating the idea of deferring its hybrid coupons, AroundTown has begun 2023 in similar fashion with a senior bond tender, says Pierre Beniguel.

In our latest blog, Pierre Beniguel looks at the implications of AroundTown’s corporate hybrid non-call and the shock announcement that it will also consider deferring coupon payments.

In our annual ‘Rodney Blog’, Eoin Walsh says that with rates now offering both yield and downside mitigation, and credit yields at near-decade highs, fixed income investors could enjoy strong returns in 2023

UBS announced a call of its low-reset 5% Additional Tier 1 (AT1) notes on Monday, showing call risk in the AT1 sector isn’t just a matter of economics, says Dillon Lancaster.

Chris Bowie explains why he believes analysing starting yields can explain improved returns over the next five years

Telefonica’s reopening of the corporate hybrid market is further evidence that large issuers with proven track records and strong financials will call their bonds even if it looks uneconomic to do so, says Johnathan Owen.

With the UK pension fund liquidity crisis sparking heavy selling in ABS, Pauline Quirin looks at how the market absorbed all the supply, and which investors have stepped in sensing a buying opportunity.

Credit metrics will continue to deteriorate in the next year or two, but European high yield bonds in particular are pricing in too severe a downturn, says Mark Holman