Covereds to tighten as clouds gather on the horizon

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By Bill Thornhill
12 Apr 2021

Covered bond spreads look set to tighten further over the next few months, traders told GlobalCapital on Monday. But even so, medium term macro-economic uncertainty is curtailing risk appetite as spread potential is limited and a market-wide sell-off may follow in the medium term.

Bank traders are broadly constructive on the near term outlook for covered bond spreads, largely reflecting the paucity of expected supply this year.

But a possible scaling back of European Central Bank asset purchases later in the year, twinned with the possibility that issuance prospects start ...

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