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.

Bond Outlook September 23 2009

There is a way of making good returns in fixed-income – bidding for new corporate issues, but its sustainability is uncertain, to the point where it looks like a mini-bubble.

Bond Outlook [by bridport & cie, September 23rd 2009]

Just how far removed the current behaviour of financial markets is from historical norms can scarcely be overstressed, and this should be taken into account by investors, not least because ultimately, a return to normal conditions is inevitable:

  • low interests rates are making money markets very unattractive
  • a whole class of securities, asset-backed bonds, has almost disappeared as securitisation has practically ceased (although signs of a slow rebirth are showing, as recommended by the IMF)
  • there are plenty of funds around but they are not reaching industry through bank loans
  • corporate bond issuance has substantially taken the place of conventional bank lending

In these circumstances investors are “thrashing around” looking for something, almost anything, to do with their money. Most simply want, as a minimum, a return better than bank interest. This represents not so much an active decision to adopt more risk, but more a move to achieve some sort of positive return. This has at least the following consequences:

  • new corporate issues are oversubscribed, even when, for a given rating, they are clearly overpriced.

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.


Unlimited access to and

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


Unlimited access to and, 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


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