January 21, 2019

Euro Area IG Corporate Bonds: Recent spread tightening unlikely to signal lasting rebound

Share on facebook
Share on twitter
Share on linkedin
Share on email

In Short

After a poor start into the year, EA IG corporate bonds have rebounded despite a strong issuance activity and ironed out the recent spread widening. But, we doubt that this indicates the start of a lasting rally.
Euro Area IG Corporate Bonds: Recent spread tightening unlikely to signal lasting rebound
Share on facebook
Share on twitter
Share on linkedin
Share on email

Highlights:

  • After a poor start into the year, EA IG corporate bonds have rebounded despite a strong issuance activity and ironed out the recent spread widening. But, we doubt that this indicates the start of a lasting rally.
  • While the fundamental situation is still sound, defaults marked a long-term trough in December, and valuations have improved, the technical situation sounds a note of caution.
  • Particularly the lack of support by the ECB in combination with a negative funds flow and the highest net issuance for a long time do not bode well for this asset class and is likely to trigger a further spread widening in 2019.
  • However, EA IG corporate bonds are still seen to perform better than EA government bonds in 2019.

Download the full publication below

EURO AREA IG CORPORATE BONDS: RECENT SPREAD TIGHTENING UNLIKELY TO SIGNAL LASTING REBOUND

Also interesting

Traffic-highway-Business-district-Jakarta-Emerging
00:11:38
April 19, 2021
Fixed Income

The Spotlight ǀ Equity-like returns with bond-like volatility investing in 75+ emerging economies

China-flag-with-indicators-and-chart
April 16, 2021
Market Commentary

China’s Q1 GDP growth: Strong year-on-year growth amid weak momentum

size 3
April 15, 2021
Market Commentary

COVID-19 UPDATE Facts & Figures