In the fi rst three quarters of 2013 HY bonds outperformed other major segments in Eur Fixed income market and their cumulated returns are now close to our expectations for the fullyear.
Yield carry has become a stronger contributor of recent and future performance, as spreads normalized. QE tapering expected to start not before Q1 2014 means that yield hunting forces are not over yet: our numbers show that the strongest role HY bonds may play as “yield supplier” is actually within the short to medium segments of the yield curve. Lower duration and default risks together with stronger technical factors are also behind our preference for short to medium HY bonds in the next months.
Valentine AINOUZ, Sergio BERTONCINI, Bastien DRUT
EUR corporate bonds continue to track the firming momentum of macro and micro trends, and spreads have tracked the fall in equity implied volatility to lower levels. Credit markets, therefore, recently de-coupled from sovereign debt, which is being negatively impacted by political uncertainties. After such an outperformance we address the valuation issue, with specific reference to the usual drivers and the yield curve segments.
Valentine AINOUZ, Sergio BERTONCINI