In this report, I look at the corporate bond market from London on Sunday, May 26th, 2019. I also do a quick update on the situation at Deutsche Bank and look briefly at the technical picture for the British pound or sterling.
I look into an FT report in which they talk about a recent article by Bank of England analysts in which they cover the U.K. corporate bond market. In this report, it is noted that the domestic U.K. bond market has ballooned in size over the last two decades. Worryingly they note, though, that the proportion of BBB or just above junk rating bonds have grown 8-fold in the last 17 years.
According to the Central Banking analysts, an economic slowdown or a credit crunch could wreak havoc on the U.K. corporate bond market as 50% of these bonds are now BBB or just above junk!
My conclusion is that one of the reasons for the growth in the corporate bond market and an increase in investors' risk-taking is mainly a consequence of the Bank of England's extremely accommodative monetary policy of the last decade.
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