Global Bond Risk Falls to 2007-Low

The cost to buy protection for investment-grade bonds in North America, Europe and Asia ex-Japan fell to a decade-low this month amid investor optimism about lower U.S. taxes and a broadening global economic recovery.

The prospect of rating upgrades outnumbering downgrades globally this year and next is higher than at any time since the financial crisis, Fitch Ratings said in a report this week. Credit quality may start to weaken beyond that as ultra-supportive monetary policies are phased out and rising interest rates start to affect funding costs and asset quality, it said.

Investors have money to put to work in the New Year and are encouraged by the stability in the major bond markets around the world, said Steve Wang, senior credit analyst at Citic CLSA Securities in Hong Kong.
Source: Bloomberg

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