Bond management: in search of lost returns

Posted on Feb 2, 2019 2021 at 7:46Updated Feb 2, 2019 2021 at 10:33

“Seen from an airplane, the landscape is arid”, quips Eric Brard, director of interest rates and credit at Amundi, to talk about the bond market at the dawn of this new year. It is true that opportunities are scarce, with more than $ 17 trillion in negative rate loans around the world. The subject is however crucial for French management, supplied by life insurance outstandings and more particularly funds in euros, made up of 80% bonds. At Amundi, the leading European asset manager, interest rate management represents 48% of the 1.660 billion euros outstanding (at the end of September 2020), against barely 17% for the equity pocket.

To find yield, bond fund managers can take on corporate credit risk. But here too, valuations are high. “The spreads [écarts de taux, NDLR] rates, which measure the premium offered against the risk-free rate, have returned to their early 2020 level [avant la crise sanitaire, NDLR] », Notes Stéphane Déo, market strategy director at Ostrum AM. Companies issued massive amounts on the bond market last year, to secure their financing. “Many have not used this money, which is now found in the deposit accounts of banks, relates Stéphane Déo. We therefore expect a drop in issue volume this year and a European Central Bank still present for purchase. We are therefore going to fight for very few papers, dear ones! “

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