New Issuance

New Fixed Income Issuances of UK domiciled Corporates

New Issuance - Market observation per 21 May 2021 -

Debt markets proved to be resilient against the backdrop of rising inflation

  • Corporate bond trading restrained after publication of UK and US inflation figures.
  • Bond markets proved more resilient than equity markets, the latter experiencing a large sell-off, with investment grade providing a limited buffer against rising rates.
  • Additionally, central banks including the BoE, continue to support low rates, thereby boosting corporate funding. This implies that an increase in market borrowing costs does not cause major risks.
  • UK domiciled issuers continue to have strong access to USD and EUR markets and investors.

Even IG bonds do not show a major response to inflation fears

  • IG bonds are generally more sensitive to any threat of increasing interest rates caused by inflation compared to high-yield debt, since IG bonds often have longer life spans and carry lower risk premia. This tendency is known as duration risk.
  • Investors expect this effect to be limited and the resilience to continue, as supportive BOE, ECB and Fed policies and low funding costs overshadow inflation fear.
  • Nevertheless, markets will continuously monitor new developments.