Debt market round-up

Would you credit it? European central banks looking for yield could soon start investing in credit, if market speculation is correct. Traditionally deeply conservative accounts that have never got into equities, they certainly face the same dilemma as other fixed-income investors. Yields on government and other AAA bonds are low and FX trading opportunities in Europe are limited these days, so credit is one of the few ways to generate positive returns. "They all own some gold, and they're earning very small returns on that," says a London-based credit analyst. A logical strategy would be to start looking at corporate bonds, bank capital, or even ABS – aided, no doubt, by helpful asset managers. Switzerland's Schweizerische Nationalbank has been investing part of its currency reserves in foreign equities and corporate bonds since June 2004, partly as a response to falling yields on 10-year Swiss Confederation bonds.