Negative-yielding corporate debt disappears as euro yields hit 8-year high

By Yoruk Bahceli

– Yields on euro investment-grade company bonds have climbed to their highest in over eight years, a widely-followed index confirmed on Friday.

Surging bond yields this 12 months additionally signifies that there are not any extra non-financial company bonds left buying and selling with damaging yields, BofA mentioned on Friday, down from a peak of practically 900 billion euros final 12 months.

Yields on the widely-followed ICE BofA euro company index rose to 1.992% at Thursday’s shut, the best since January 2014, eclipsing a peak at the beginning of the pandemic in early 2020.

The yield has risen four-fold from round 0.50% at the beginning of the 12 months as a hawkish pivot from central banks the world over has despatched rates of interest sharply increased.

Rising charges has additionally lifted the shadow of damaging yields over non-financial company debt, which peaked at practically 900 billion euros ($946.98 billion) final 12 months, BofA mentioned.

Graphic: Euro IG corp bond yield highest since 2014 – https://fingfx.thomsonreuters.com/gfx/mkt/akvezyxaypr/europercent20corppercent20yield.png

Euro company debt got here below elevated strain because the European Central Financial institution has opened the door to 2022 fee hikes in February and the invasion of Ukraine, a a lot larger threat for the bloc’s corporations, pushed borrowing prices even increased.

Cash markets moved on Friday to cost in over 90 bps ECB of fee hikes over the rest of the 12 months

Rising charges and excessive volatility in markets has all led to a pointy fall in company debt issuance this 12 months.

A mere $93 bln equal of bonds have been issued in euros and sterling from European non-financial corporations, the bottom since 2017, in line with Refinitiv information to April 27.

($1 = 0.9504 euros)

(The story refiles to make clear headline.)