Bond market liquidity, especially on the bid side, is still present, but shows signs of tightening. To our hypotheses last week (market makers short, low interest rates assured, the ECB collateral scheme and lower CDS spreads) can be added the fact that credit funds have been rebalancing their portfolios, and consequently buying more corporate bonds. The phenomenon is likely to be short-lived. Nevertheless, the demand amongst our clients for corporate bonds remains solid, quite independently of the practices of market-makers and credit funds. |
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