Sovereign Debt Steals 'Credit Risk' Crown From Corporates

Gone are the days when sovereign debt was the preserve of investors looking for a low-yield safe haven. With Greek sovereign debt now paying steadily higher yields (it reached 6.1% at the January EUR8bn 5-yr bond sale), sovereign debt is now becoming appealing to credit or spread buyers, who would normally purchase high risk debt such as that of companies. CFW examines the potential impact of a 'crowding out' effect on corporate issuance from sovereign debt issuance, whereby a fall in corporate bond prices and rise in yields leads to bottlenecks in corporate

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