Credit quality deterioration is inevitable
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
Insights Topic
Europe
Healthy premiums drive big day for primary markets
With well over €10bn of new bonds sold by European banks and corporates on Monday, Felipe Villarroel analyses the pricing and looks at the patterns that usually emerge when primary markets reopen.
Are Europe’s winter prospects warming up?
With European energy prices well off their peaks, Felipe Villarroel breaks down the myriad factors impacting the region’s economic prospects in the next few months.
To call or not to call – who decides?
With a surprising statement issued by the Australian regulator, Eoin Walsh looks at the wider implications for the calling of AT1 bonds
AT1s: when refinancing a 5% bond at 7.25% makes sense
With call risk in Additional Tier 1 (AT1) bonds back in the headlines, Felipe Villarroel explains how banks think about the economics of calling, and why he believes market participants frequently overestimate this risk.
Floating rate demand driving deals as ABS reopens
Demand for floating rate assets has driven a strong reopening of the European ABS primary market, and is drawing new investors to the asset class, says Kevin Law.
Help arrives as Ukraine’s allies act on Russia’s energy war
European governments are unveiling hefty support packages to ease the pain of Russia’s gas shutdown, with implications for inflation and the chance of recession, says Dillon Lancaster.
Default risk still subdued despite escalating energy crisis
While economic uncertainty in Europe is building, the healthy cash balances and low refinancing needs of Europe’s high yield bond issuers make a spike in defaults unlikely, says George Curtis.
Europe vs. the US – it's just a question of value
With Europe facing an energy crisis and the UK bracing for a five-quarter recession, a strong allocation bias to the US seems a no-brainer. However, George Curtis says that when looking at relative value in fixed income, the decision is never that simple.
There is plenty more yield to come in floating rate bonds
Fixed rate bond yields may have climbed as markets priced in higher interest rates, but both existing and new investors in floating rate bonds have more to gain as central banks keep hiking, says Pauline Quirin
What is the AT1 market pricing in?
With bank Additional Tier 1 (AT1) bonds broadly trading at a 10% discount to par and many being priced to perpetuity, Dillon Lancaster suggests investors are either missing or ignoring the solid fundamentals on show in Q2 earnings.
Why 85 is the new par in high yield
Pierre Beniguel explains why high yield issuers are selling new bonds at steep discounts to par value, and why this represents an opportunity to build potentially significant performance into fixed income portfolios going forward.