Volatility expected in credit market

UK Corporate bonds have had a very good run recently. Corporate bond spreads have fallen again, implying that investors are becoming more relaxed about corporate risk but is that really the case? It certainly looks like it considering the enthusiastic take-up of new debt issuance. Issuance has been strong and issuer credit quality has reduced. During the second half of 1998, AAA sovereign and supranational issuance was 60% of total eurosterling issuance, and that has fallen sharply to just 12% in the three months to July 2001. Investors do now seem keener to take on more risk ' in ...