UK

UK government bonds have been playing their traditional role as a haven trade for sterling investors amid the Brexit inspired turmoil of the last 2.5 years. But one possible outcome, the likelihood of which has grown this week — a Labour Party victory in a general election — could push up Gilt yields because of what investors have dubbed the ‘Corbyn premium’.

Due to the lack of new issuance for over a week in the European corporate bond markets, the vote of no confidence in UK prime minister Theresa May was the talk of both the buy and sell sides on Wednesday morning. But there has been little effect on the market itself so far where political developments in other European states are more of a concern.

With the UK in turmoil just over three months before its date of departure from the European Union, a core section of the bank bond investor base is refusing to get out of its sizable position in UK bank debt.

Rising hopes that the UK can escape the nightmare of Brexit are misplaced. A second referendum would carry huge risks, and even if the outcome were Remain, it would leave an unstable Britain with a damaged relationship with the rest of the EU.

SQN Secured Income Fund, the London-listed closed end investment fund focused on small and medium sized enterprise loans and secured lending, is preparing to raise up to £100m to capitalise on opportunities it sees in alternative investment.

If the UK were to crash out of the EU without securing a deal it would throw up a host of legal and regulatory risks for UK and European covered bonds and put a dampener on otherwise supportive market conditions, Moody’s said in a report published this week.

The UK’s Interserve plans to swap a “substantial” portion of its debt for equity, as the embattled support services and construction firm tries to avoid the same fate as government contractor Carillion.

It may be the second week of December, when the corporate bond market is typically quiet ahead of the Christmas break, but there is still plenty for participants to ponder, even though the likelihood of new issuance is considered very low.

AJ Bell surged by more than 30% in the aftermarket on Friday after the Manchester-based investment platform priced its £173m IPO on the London Stock Exchange at the mid-point of the initial range.

The UK Financial Conduct Authority (FCA) on Friday proposed new rules that would permanently restrict or ban the use of certain complex derivatives products by retail customers.

In this round-up, Trump was confident China would deliver on promises from G20 dinner, China signed several cooperation agreements in Panama and Argentina, China Financial Futures Exchange (CFFEX) planned to lift bans on trading stock-index futures to boost market activity.

Judging extension risk is a key part of investing in bank capital. If investors call it wrong, it is hard to say they have been grossly mistreated.