View more on these topics

Sell-off sees bonds bounce back

Sell-offs in the corporate bond market are providing investment opportunities in the financials sector, says PSigma Investment Management.

The firm says that financial bonds are now attractive, especially on a yield or risk-adjusted basis, with some bonds yielding 9 to 10 per cent.

A year ago, the spread was 75 basis points over Libor but PSigma says in many cases it is now over 300 basis points.

It says action by central banks, recapitalisations and dividend cuts are all proving positive for bank bonds. It considers that long-term capital-raising by banks might be negative for equity holders in the long term but these act as a “real positive” for bondholders.

Investment strategy director Thomas Becket says: “Corporate bonds have been sold off heavily over the last nine months as the outlook for specific companies and the general macro backdrop have deteriorated and investors have fled riskier assets for safe havens such as gold and sovereign bond markets.

“High-yield bonds are rightly perceived to be a higher-risk investment, as the yields available should reflect. However, by this time last year, the yields on offer from investments in this space were implying an extraordinarily benign economic backdrop, generally yielding on average about 75 basis points above treasuries and gilts.”

Recommended

Chaser understands issues better than FOS

In response to last week’s article on claim-chasers moving into whole of life, I must stress that your editorial line is one-sided and not representative of the true picture.

Key themes for 2017

Capital Market Notes, December 2016 Dave Lafferty, chief market strategist at Natixis Global Asset Management, assesses the accuracy of his 2016 outlook and provides his thoughts and outlook for 2017. Click here to read the full article

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com