corporate bonds

Pfizer vaccine

Pfizer’s Vaccine Breakthrough Sweet Nectar For Corporate Bonds

Mondher Bettaieb Loriot / Claudia Fontanive-Wyss (Vontobel AM) | The recovery takes hold now that a Covid-19 vaccine is on the immediate horizon. Pfizer has announced that they, together with BIoNTech, are the first drugs-makers to achieve credible positive readings on the effectiveness of their Covid-19 vaccine trials. The recovery stage is generally the sweet spot for corporate bonds and credit spreads as corporates further increase cash flows, act for the benefit of bondholders and, in the end, reduce leverage.

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EU: Dumbing it all down

ZURICH | UBS analysts | Corporate bond markets in Europe have been quite resilient through these past few sessions in both IG and HY, offering relatively good outperformance. It would appear it is increasingly becoming a case of just buy it (corporate bonds), because that’s what’s best. Don’t worry, one will be looked after – the ‘structure’ after all is in place. There may be no growth, but you are promised low interest rates (zero at the front end), low funding yields (lowest ever, iBoxx corporate bond yields at 1.4%), a low default rate (less than 3%) and your money back at maturity.

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ECB’s eventual purchase of corporate bonds: Inflating the bubble?

MADRID | By Julia Pastor | Even though the ECB dismissed the rumours about its intentions of buying corporate bonds, all market players are asking for stronger actions by the central bank. Such measure could become the ace up the ECB’s sleeve for its December meeting. Given the liquidity surplus in the companies’ debt market (due to the “low interest rates, not to cheap credit,” as experts at Renta4 pointed out), including this sort of assets could add to such surplus. 

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ABS drive, to the point

MADRID | The Corner | Mario Draghi will finally reveal the details of the private debt purchases program on Thursday. Markets take for granted that he will continue feeding expectations that he is willing to do more if necessary. The ECB’s President is however not likely to announce the acquisition of retained ABS, nor to include the so-called mezzanine tranches. As for the rumours about Mr Draghi pushing the ECB to eventually buy bundles of Greek and Cypriot bank loans with “junk” ratings, our readers should note that those tranches would be senior, and in very small amounts. However, “symbolically is an important issue about what they are willing to do,” JPMorgan analysts pointed out on Wednesday.



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Corporate bonds gain positions

Corporate bond markets are still buoyant, according to CaixaBank analysts. Many firms, taking advantage of this renewed appetite for risk, have intensified the rate they issue debt.

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Impact of euro crisis in the US economy

By Luis Arroyo, in Madrid | A lengthy series of the risk premium spread (over capital or liquidity) between US Treasuries and BAA corporate bonds tells us several things: 1) that each time there has been recession (gray areas) this premium has picked up markedly; 2) the time it reached the highest point was in the last recession, up to 6%; 3) the 60-year average of this spread is 1.8%; 4) the current figure…