'Reality sinking in' over negative yielding new issues, say FIG bankers

Debt capital markets officials say that it is now only a matter of time before a bank plucks up the courage to sell a new senior bond with a sub-zero yield, following examples set in the covered bond market. The investor said that issuers could sell negative yielding covered bonds if they reduced th...

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Bibliographic Details
Published in:Global Capital 2019-08
Main Authors: Thornhill, Bill, Davies, Tyler
Format: Article
Language:English
Subjects:
Bond issues
Bond markets
Capital markets
Financial institutions
International finance
Treasuries
Online Access:Get full text
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Summary:Debt capital markets officials say that it is now only a matter of time before a bank plucks up the courage to sell a new senior bond with a sub-zero yield, following examples set in the covered bond market. The investor said that issuers could sell negative yielding covered bonds if they reduced the size of their deals as they woudl not be relying upon asset managers and insurance companies, which care more about absolute yields than bank treasuries do, to fill order books. [...]a second FIG syndicate banker warned that the migration of covered bond investors into the senior market would only give spreads further cause to tighten in the coming months.
ISSN:2055-2165