The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Euro corporate bonds - How we learned to love eventrisk

Investors in euro corporate debt have had a rollercoaster ride. They've gone from europhoria to nursing burnt fingers, and to drawing the lessons for 2000. As if buying endless new credits wasn't complex enough, they are simultaneously having to understand and predict the course of Europe's M&A boom. How do you cope in a market that's fast-growing, unbalanced and full of nasty surprises? Marcus Walker profiles four of the top asset managers to find out

    When Standard & Poor's downgraded Mannesmann from single-A to BBB+ on November 24 following the German company's bid to buy the UK mobile-phone operator Orange, it caused howls of pain in the offices of bond fund managers all over euroland. Many had considered familiar names like Mannesmann to be the safe way to transform their government-bond holdings into a credit portfolio. Instead, they realized that Europe's soaring M&A activity can hurt creditors of higher-grade companies. Shareholder value can mean bondholder losses.

Bond fund managers have also struggled with the fact that while they typically have to manage risks against a bond index, euro corporate indices are poorly diversified and patchy in their liquidity. Disintermediation in Europe has happened at an uneven pace so far: while telecoms companies and financial institutions have embraced the corporate bond market, the same isn't true for, say, consumer goods manufacturers. The heaviest bond issuance comes from the sectors with the most mergers and acquisitions. Once again, the M&A dynamic has made fixed-income investors' lives difficult.

With the first year of the euro corporate bond market complete, Euromoneyspoke to a group of leading fund managers about their investment methods, experiences in euro credit so far, and hopes for 2000.



You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree