Junk Corporate Bonds in Europe Head for First Loss in 10 WeeksAbigail Moses
High-yield corporate bonds are poised to hand investors in Europe their first losses in 10 weeks.
The notes lost 0.2 percent, erasing two weeks of gains, according to Bloomberg bond index data. Average yields on the notes climbed 10 basis points to 3.5 percent during the period, the data show.
“It’s a blip and a buying opportunity more than anything else,” said Jeroen van den Broek, head of developed markets credit strategy at ING Bank NV in Amsterdam. “Any widening is being taken by the market as an opportunity to load up a little. We haven’t seen any real money selling.”
Bond prices climbed almost every week this year on mounting expectation the European Central Bank will add more stimulus to revive a slowing recovery. German business confidence declined more than economists forecast today on concern the region’s biggest economy will slow.
The cost of insuring speculative-grade bonds rose to the highest in almost a month this week, with the Markit iTraxx Crossover Index of credit-default swaps on 60 companies with mostly speculative-grade ratings increasing to 283 basis points on May 20. The gauge has since declined to 271 basis points.