Brazil leads as credit risk in Latam region recedes Brazil’s 5-yr sovereign CDS spread has tightened to its lowest level since last August Peru, Chile and Colombia have all seen a 35% tightening in sovereign credit spreads Markit iBoxx USD Emerging Markets Corporates LatAm Index has returned 7.7% this year Credit markets reacted positively after…

When it comes to the Italian banks, pessimists are not in short supply. Indeed, to be bullish on this sector could be considered contrarian, or even foolhardy, given its parlous state.  Asset quality is the overriding problem – Italy’s banks have €360bn of non-performing loans on their balance sheet, about a third of the eurozone’s…

Investors embrace long dated corporate bonds Investors have been loading up on relatively higher yielding long term corporate bonds, in spite of the asset class seeing its average credit rating decline in recent years. Long dated corporate bond ETFs have seen $90m of inflows ytd, over twice the 2015 total BBB bonds make up 47%…

Returns on US dollar denominated emerging market (EM) bonds have outstripped developed nation peers so far this year, as confidence in the region has returned after market volatility in late 2015. Since January 2016, dollar denominated EM sovereigns and corporates have returned 4.3% and 3.2% respectively, according to Markit’s iBoxx indices. The returns surpass those of…

Investors embrace HY ETFs as sentiment turns High yield credit has enjoyed a sustained rally over the past five weeks and investors have taken advantage through ETFs. High yield bond ETFs have seen five consecutive weeks of positive inflows Markit iTraxx Europe Crossover index has seen its spread fall from 486bps to 332bps Oil &…

Investors have been flocking to government bond ETFs at a record pace since the start of the year, hoping to shelter from the surge in credit risk and profit as the market discounts the probability of nearing interest rate hikes. This has so far proved profitable as global government bonds have largely outperformed their corporate…

European insurance bonds sink to bottom of the pile European bond yields have fallen to new recent lows as the market takes an increasingly dim view of growth prospects, which has in turn seen insurance bonds come under increased pressure. iBoxx € Insurance the worst performing sub index of the iBoxx € Corporates universe Investment…

Last summer saw investors turn to shorting bond ETFs as the bond market kicked back to into life amid the Greek crisis. Volatility has continued in earnest in 2016 as the Markit iTraxx Europe index, which tracks CDS spreads across investment grade issuers, hit a three year high of 121 bps earlier this month. The…

The shrinking of balance sheets has become a common theme in recent years, particularly in the financial sector. Investors are punishing banks that either unwilling or unable to implement a more conservative financial strategy. It is increasingly clear that the same phenomenon is now observed in the commodities sector. Mining firms need to scale back their…

European credit markets, led by the banking sector, have seen risk escalate over the past several weeks with the Markit iTraxx Europe Main index seeing it’s spread widen to June 2013 highs. One relative bright spot however, has been the region’s sovereign credit, which has largely steered clear of the contagion developed in the corporate…