Even a Remain Vote May Not Redeem GBP Credit Curve: Analysis
Source: BFW (Bloomberg First Word)
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(Bloomberg) -- GBP corporate credit may continue to underperform EUR counterparts even if the U.K. votes to remain within the EU as the British political landscape alongside the ECB’s stimulus efforts may reduce its allure, Bloomberg strategist Simon Ballard writes.
Alert: HALISTER1- A “remain” verdict may trigger a near-term rally in GBP corporate bonds, causing the curve to narrow relative to EUR credit
- Still, any such rally may be short-lived
- For one thing, concerns remain over U.K macro and political outlook, and in particular a potential post- referendum leadership challenge to Prime Minister Cameron
- The ECB’s corporate-sector purchase plan scheduled to run until late 2017, creating long-term structural support for EUR corporate bond spreads; may favor continued outperformance of asset class relative to GBP corp credit over coming months
- NOTE: Simon Ballard is a credit strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.
Source: BFW (Bloomberg First Word)
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UUID: 7947283