Pep changes to impact on UK corporate bonds

By Ruth Alexander Pep and Isa rule alignment may lead to the underperformance of corporate bond Peps, which do not take advantage of the wider investment remit, according to Credit Suisse Asset Management. Fay Watson, manager of the Credit Suisse Corporate Bond Monthly fund, said the alignment of rules will lead to greater global bond exposure in corporate bond Peps, which will lead to the widening of spreads over gilts. This will be due to reduced demand for bonds of companies that are incorporated in the UK. At present, the corporate bond Pep market is £5.6bn in size, while the enti...