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Taking the pulse of innovation in credit markets for 2016

Simon Linwood, Head of Sell-Side Accounts at MTS shares his thoughts on the key drivers of change in today’s credit markets, the challenges and opportunities market participants face sourcing liquidity and how MTS is developing innovative ways to facilitate efficient pre-trade price discovery and trade execution on electronic venues.


Q1 What trends are currently characterising the credit markets?

We are seeing record levels of corporate bond issuance year-on-year in Europe and the US; a trend that has stimulated significant secondary credit market activity.* Government monetary policy, a prolonged low interest rate environment and strong deal flow of bond issuance have all contributed to record volumes. However, in Europe, the ECB’s decision to extend QE to EUR 80bn a month and also to include corporate debt has further raised concerns around liquidity. Moreover, Brexit and the uncertainty around markets and the geo-political landscape as a whole have further compounded liquidity fears, with market participants, exchanges and electronic market operators all looking at the implications of UK domestic authorisation and the passport of activities into the EEA member states.’

Spreads across the capital structure have continued to tighten as a result of the booming primary market and efforts by the ECB and other central banks around the world to encourage economic growth by keeping borrowing costs low. This has lowered the perceived credit risk of buying corporate debt, encouraging investors to turn away from the safe haven of government debt resulting in a fresh wave of issuance in structures such as Hybrids, AT1’s and Co-Co’s.

You can read or download the full article in PDF format here - Download Article

Mr Linwood will be speaking at our upcoming 4th Annual European Electronic Bond Trading Forum on 12th & 13th September in London.  For more information please visit our event page, or you can secure your place here.

This content is provided by Euromoney Seminars for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.