Credit curve flattening intact (for now)
Tier one covered bonds — those from national champion issuers — in Europe’s periphery are cheap to equivalent senior unsecured notes and with the market in short supply further outperformance is likely. Regulation on the Liquidity Coverage Ratio, declining issuance volumes and a further injection of central bank liquidity should fuel the move. But with the US rate cycle set to turn, the longer term picture is more unsettling.
Unlock this article.
The content you are trying to view is exclusive to our subscribers.
To unlock this article: