With yields at all-time lows and spreads continuing to fall, it is difficult to find value in covered bonds. But with supply drying up and further stimulus from the European Central Bank on the way, there are some overlooked parts of the market which ought to perform, traders say.
Covered bond trading inventory is getting lower as it becomes increasingly difficult to source bonds in the secondary market. Nonetheless, pockets of activity are being seen. With investors betting on a further round of monetary policy stimulus.
The short end of the curve is the most