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.
Citigroup fixed-income rejig – again...
Although it has only been a year since the last time Citigroup reorganized its fixed-income division, the US firm has realigned the engine of its capital markets business again. The bank has merged fixed-income capital markets, global structured credit and global credit trading into an integrated credit business group.