In a week of sharp contrasts, parts of the bond market are enjoying exceptional conditions for issuance, while others are feeling uneasy. Sometimes both interpretations are given of the same market — like sterling bonds, which have been hammered in the press this week as about to spiral into another ‘Liz Truss moment’.
To sterling bond professionals, the media doom-mongering is like a lurid dream — it has scant connection with reality.
On the very day that caused most alarm, when the 30 year Gilt yield spiked to a 27 year high, the UK calmly issued its largest ever Gilt — and plenty of corporate and bank issuers made hay in the market too.
In the emerging markets of central and eastern Europe and the Middle East (CEEMEA), investor demand is red-blooded, and issuers are responding with waves of deals. The market is on course to break records, but borrowers can still trip up if they price too aggressively.
Supranational, sovereign and agency bonds are flecked with light and shadow. While deals like the UK’s and Italy’s have blown out and set new highs, the odd issuer amid the throng has found the market surprisingly hard going. The mood has cooled since August — what will happen next week when the French government is likely to fall?
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