/ Research Center

06.12.2019 - Monthly Cross Asset

Corporate fundamentals are at the centre of the game

Over the last decade, easy financial conditions encouraged an increase in sovereign and corporate debt. Indeed, the leverage of American companies has reached record high levels and US corporate debt has been used for financial risk-taking to fund corporate payments to investors, as well as for mergers and acquisitions. At the opposite, the leverage of European companies has remained at low levels as European companies have remained more cautious over this cycle. In 2019, we have evolved in a new regime: the global economy has entered a synchronised slowdown and major central banks have returned to an easing stance. What are the risks for companies in this new context? We are following closely: The downgrade risk in the US Investment Grade universe. Net leverage for US issuers have resumed their upward trajectory in recent months. In 2020: (1) companies to make a trade-off between maintaining share buy backs and the stability or their debt (2) the downgrade risk to increase among firms facing increase pressure on profits. The default rate risk for low-quality high-yield bonds. Sluggish earning growth poses the biggest threat for companies to pay interest on their debt despite the low cost of financing. Indeed, at this stage of the cycle, we think that interest coverage is more closely related to earnings than to its interest expense: interest coverage could be quickly eroded by a hit to earnings. A selective approach is required in the low-rated Euro and US High Yield segments.

Valentine AINOUZ

Deputy Head of Developed Market Strategy Research

02.02.2018 - Thematic Paper

US credit: don’t worry about the macro, focus on technicals

What should we expect for US credit in 2018, in a context where spreads and volatility are closing in on cycle lows?

Valentine AINOUZ

Deputy Head of Developed Market Strategy Research

06.10.2017 - Expert Talk

Positive stance on the US IG market

The dollar credit markets have performed well in recent weeks, bolstered by stronger than expected US growth of around 2%, the gradual normalisation of monetary policy and, especially, the resurgence of optimism related to a possible tax reform. Dollar IG credit spreads tightened by 9bp in September and by more than 23bp since the beginning of the year.

Valentine AINOUZ

Deputy Head of Developed Market Strategy Research

16.02.2017 - Monthly Cross Asset

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

2016 was a remarkable year for credit markets. Donald Trump’s victory was greeted very favourably by credit markets, and changed the tone somewhat. In this new environment, what should your position on the credit markets be?

Valentine AINOUZ

Deputy Head of Developed Market Strategy Research

17.01.2017 - Monthly Cross Asset

Corporate bonds: Financials offer attractive valuations among EUR IG corporate bonds

In 2016 EUR-denominated corporate bonds were among the best performing asset classes on fixed-income markets: in fact, corporates outperformed also peripheral govies for the first time in years.

Sergio BERTONCINI

Head of Rates and FX Research

2016-02-US BBB IG spreads are back to historical recessionary levels

15.02.2016 - Monthly Cross Asset

US BBB IG spreads are back to historical recessionary levels

Valuations of BBB US corporate bonds have returned to levels consistent with those reached during the last recessions or systemic crises.

Sergio BERTONCINI

Head of Rates and FX Research

15.06.2015 - Monthly Cross Asset

Supply dynamics of EUR corporate bonds and government bonds in QE times

The ECB’s QE initiative has indirectly supported a record supply of IG corporate debt in response to strong demand for yield: as a consequence, in April 2015, net issuance volumes of non-financial corporate bonds already reached the levels recorded during the whole of 2014.

Sergio BERTONCINI, Bastien DRUT

15.06.2015 - Monthly Cross Asset

A good resistance of credit in spite of the rates' increase

Eurozone credit markets saw an unexpected rise in German yields. The scale and speed of the increase surprised many. However, credit held up fairly well.

Valentine AINOUZ

Deputy Head of Developed Market Strategy Research

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Corporate fundamentals are at the centre of the game

US credit: don’t worry about the macro, focus on technicals

Positive stance on the US IG market

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

Corporate bonds: Financials offer attractive valuations among EUR IG corporate bonds

US BBB IG spreads are back to historical recessionary levels

Supply dynamics of EUR corporate bonds and government bonds in QE times

A good resistance of credit in spite of the rates' increase

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