Investors should use the range of credit derivatives products to hedge their exposure to European corporate bonds, Morgan Stanley fixed-income analysts said today, adding they are bearish on the prospects for European credit next year.Neil McLeish, credit analyst at the US bank, said current levels of debt were unsustainable. He also argued that credit prices reflected high market expectations, and that there is “virtually no risk premium” providing an incentive for continued activity in the market for investment-grade debt.
The price of high-yield debt was more indicative of real value, argued McLeish. He also said that credit had excelled in 2003 due to corporate deleveraging, which could not continue indefinitely.
More on Structured Products
Regulator set to focus on backtesting and replicability of index products
The watchdog’s priorities for 2015 include drawing up new powers of product intervention
Contineo initiative set to transform structured product sector
Trade body says issuers will face unnecessary legal and compliance bills under Esma plans
Sign up for Risk.net email alerts
Sponsored video: Tradeweb
Multifonds talks to Custody Risk on being nominated for the Post-Trade Technology Vendor of the Year at the Custody Risk Awards 2014
Sponsored webinar: IBM Risk Analytics
Nominated for two technology awards
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.