Volatile outlook for corporate bonds

BY Michel Gonnard , head of global fixed interest at Cazenove The UK corporate bond market was particularly challenging to analyse during June. At first glance, corporate bonds performed particularly well, with a total return of 1.8% (capital plus income). However, closer observation shows the capital gains for the month can be attributed as follows: 1.9% from the performance of the underlying gilt market and -0.9% for the negative impact of widening corporate bonds risk premiums. Further analysis reveals that the widening of the risk premium had a -0.3% impact on the AAA-rated sec...