Implications for bonds

Emu will revolutionize European bond markets. New sectors will emerge - high-yield bonds, for instance - and the whole structure of credit ratings will need to be reconsidered. By Randy Sandstrom.

Life under the euro

The changeover to a single currency is likely to have an enormous effect on European bond markets by creating new liability structures, performance benchmarks and asset allocation models. The impact should be very positive. The macroeconomic characteristics of Emu – fiscal discipline, low interest rates, reduced currency risk – and the microeconomic effect on bond markets – low operational costs, enhanced efficiency, better liquidity – should provide a major boost for suppliers and users of private debt markets.

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