Bond Risk Rises in Europe With Brexit Concerns as Issuance Slowsby and
Corporate bond risk surged in Europe and issuance slowed as concern grew that the U.K. will vote to leave the European Union.
The Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies rose for a fourth day, climbing to a three-month high of 87 basis points, according to data compiled by Bloomberg. Non-financial companies sold about 14 billion euros of bonds this month, compared with about 30 billion euros in the same period in May, according to data compiled by Bloomberg.
“There’s massive insecurity in the market,” said Anthony Peters, a strategist at Sol Capital Markets. “Who’s going to commit their customers’ money if they don’t know what happens next?”
Investors are bracing for a British exit from the EU after four polls published on Monday put the “Leave” campaign ahead of “Remain” and the Sun, Britain’s biggest-selling newspaper, backed a so-called Brexit in the June 23 referendum. Traders are also positioning themselves before monetary policy reviews by the Federal Reserve and Bank of Japan this week.
“This is not just a U.K. phenomenon any longer,” said Marco Baldini, head of European syndicate at Barclays Plc in London. “It’s affecting all markets and clearly issuers are not going to be in a rush until they see some kind of stability returning.”