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.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

Macaskill on markets: Central bank and chill?

Central bank corporate credit support is helping to cut debt costs for borrowers such as Netflix. A government put option won’t cure all the problems looming in the credit markets, however.


Jerome-Powell-Scrolling-illo-780.jpg



The European Central Bank moved towards joining the Federal Reserve as a buyer of last resort for high-yield debt on Wednesday April 22, with a relaxation of the quality of collateral it will accept for loans.

This gave another push to a recovery in credit spreads over government benchmarks from the highs seen in March, which has helped to keep the market for new issuance of corporate bonds open for borrowers of different types.

Netflix, the online screening firm that has seen demand for its output soar during the coronavirus lockdown, was one beneficiary of the move by central banks to support credit markets.

Netflix issued €470 million of five-year debt with a 3% coupon that marked its lowest cost to date for a bond issue on the day after the ECB’s collateral move, alongside a $500 million note with the same maturity and a 3.625%





Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to Euromoney.com and Asiamoney.com analysis and receive expertly-curated updates direct to your inbox.

 

Already a user?

Login now

 

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