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Defaulting to dollars in volatile times denies the euro market the resilience it needs
Asset class could be protected by rising demand
Enslaved by interest rate volatility, we are all rates traders now
A corner of the UK market has provided one of the few pain trades so far since war broke out in the Middle East
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It’s hard to shed too many tears when a leveraged private equity company with stacks of non-recourse debt transforms into a respectable listed investment grade corporate, with the attendant switch from mammoth securitization financings to regular unsecured vanilla bonds. But monetary policy is now systematically pushing in this direction.
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Amid much turmoil over whether Portugal will lose the one investment grade rating that is keeping it on the European Central Bank’s shopping list, no one is asking a vital question.
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EM bonds are the must-have item of 2016 — an oasis in a yield-less desert. Record investor inflows are fuelling rising asset prices. It will not last forever, so borrowers should take advantage.
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Recent signals from European regulators over the treatment of additional tier one coupons are great for bank debt investors, but a softer approach may also open up the market to unfamiliar faces.
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It is a neat irony that, following the UK’s vote to leave Europe, the sterling bond market is starting to look more and more European.
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The UK’s RMBS market shrugged off Brexit. Whether it can survive the Bank of England’s new Term Funding Scheme (TFS) is another matter.