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Bonds issued by Atos and Thames Water are trading at distressed levels as investors prepare for a changed climate after the UK election.
How have the world’s biggest corporate borrowers changed since 2016?
Our corporate bond tool shows that dollar-denominated Chinese real estate bonds are collectively worth just 12% of their total value two years ago. By analysing iBoxx departures and distressed prices, we firm up this analysis and look at the wider implications for China’s troubled economy.
High interest rates were a dampener on corporate borrowing but now the trend has reversed, led by two sectors with their own inflationary characteristics.
At first sight, corporate bonds did badly in 2022, but aside from a handful of exceptions, this was the result of the sell-off in government debt, our analysis shows. With yields of 4-5%, investment grade bonds are now an attractive asset class.
China’s real estate developers are frozen out of the bond markets, with steep losses priced in for bonds that haven’t yet defaulted. A sketchy regulatory rescue plan is likely to be too little, too late to make a difference.
Inflation-busting is likely to involve a recession, and companies are starting to reduce debt built up during the pandemic. What’s the best way to do it?
Inflation is supposed to be good for corporate bond issuers, because the real value of repayments is eroded. But what if a company’s ability to repay debt from earnings is eroded even faster?
One in two corporate bonds issued this year have been high yield, after redemptions are taken into account. Who are the winners and losers so far?
Distress is building in corners of the Chinese offshore corporate bond market. What does this tell us about the nation’s relationship with foreign capital and investment?