Expect Corporate Credit to Be a Port in the 2022 Storm
In 2021, superabundant sovereign issuance sideswiped the European corporate bond market. Next year will be different.
No. Some other bond.
Photographer: Michael Ochs Archives/MoviepixThe European corporate credit market was feeling just a little sorry for itself in 2021. Activity was crowded out by massive sovereign issuance, with noticeable spread-widening in the fourth quarter. The corporate market certainly did not fire on all cylinders because of the persistence of Covid-19. And the pandemic looks to stretch deep into 2022.
All that, however, shouldn’t affect how investors look at credit spreads in the new year. Indeed, the differentials may increase the attractiveness of bonds from companies that are increasingly profitable as the virus loosens its grip. Healthy corporate credit will be more of a haven than burgeoning government debt.