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What should your position on the credit markets be in the wake of Trump?


The essential

2016 was a remarkable year for credit markets. Corporate bond yields were strongly positive relative to standard government issues: US HY (+16%), Euro HY (7.6%), US IG (4.7%), and Euro IG (2.4%). We believe that in 2017, the credit markets will enjoy a favourable economic environment.


Additionally, technical factors will still be highly favourable on the euro market, and should even improve on the dollar market. 2017 is likely to mark a turning point: We anticipate a slight de-leveraging of US corporate debt levels and a return to leveraging for European companies. Investors’ yield expectations for 2017 are much more limited: the current level of spreads is much tighter than what was available at the start of 2016. We also note that the US market is outperforming its European counterpart by far. Against this backdrop, we prefer segments that offer yield in the eurozone (HY, financials, BBB) and the IG segment within the dollar market.

CROSS ASSET (Download)

February 2017


Février 2017


The Article


AINOUZ Valentine , CFA, Credit Strategy
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What should your position on the credit markets be in the wake of Trump?
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