The price of protection

The shifting dynamics of supply and demand within the UK corporate bond market have brought about a decline in investor pricing power. To redress the balance, investors are demanding increasingly stringent covenants, as Hardeep Dhillon discovers.

The UK’s corporate bond market has historically been a restrained creature. Fewer bonds and paper-hungry investors snapping up new issues have traditionally kept secondary spreads tight.

But in recent years the market has begun to lose some of its composure. The tendency for companies to issue debt across currencies means the sterling market is more exposed to the euro and dollar markets’