Euro corporate bonds a ‘beacon of stability’?

Europe’s corporate bond market will be “a beacon of stability” in 2017 despite huge uncertainties plaguing the political sphere, according to Alliance Bernstein’s Jorgen Kjaersgaard.

Euro corporate bonds a ‘beacon of stability’?

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The extension of the European Central Bank’s (ECB) quantitative easing programme, solid supply and demand and companies’ thrifty borrowing habits all suggest the continent’s bond market will be well-placed throughout the coming year Kjaersgaard, manager of Alliance Bernstein’s European Income Portfolio, said.

Despite repeated warnings of a market rotation away from bonds, Kjaersgaard instead insists the ECB’s extension of quantitative easing to December 2017 will put “a solid floor under euro-area bond prices” and help anchor regional yields.

He added that the supply and demand dynamics in Europe are a good sign for bond markets.

“European corporate bond issuance has been growing, but so too has demand from bond buyers seeking out higher-yielding assets as government bond yields have lurched ever-lower,” he said.

“Buying demand continues comfortably to outstrip the supply available – which is positive for bond creditors and prices.”

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