China has dominated global issuance of "green" bonds for two straight years — a trend that will likely continue as the world's top carbon-emitter tries to play a larger role to contain climate change. The Asian economic giant burst onto the scene in 2016 to take the crown as the world's largest issuer of green bonds — a debt instrument with proceeds that are used to finance activities that benefit the environment. China is set to retain its top spot in 2017.
China will issue 2 billion U.S. dollars worth of dollar-denominated sovereign bonds on Thursday, China's Ministry of Finance (MOF) said here on Wednesday. China will issue the sovereign bonds in the Hong Kong Special Administrative Region (HKSAR), including 1 billion U.S. dollars of five-year bonds and 1 billion U.S. dollars of 10-year bonds.
Austria is set to raise 100-year debt in the latest indication of hot investor demand for long-dated sovereign bonds. It aims to raise at least €1bn; bids from potential investors have topped €11bn, dealmakers say. A successful sale would demonstrate that demand for super-long bonds, whose prices are extremely sensitive to interest rate changes, remains solid even as central banks start winding down their crisis-era stimulus measures.
The International Monetary Fund’s board on Thursday approved a $1.8 billion loan to Greece — but will only release the money if the country gets debt relief from its European creditors. The IMF has praised Greece for taking steps to reduce its budget deficits, including expanding its tax base and cutting spending on pensions. But the lending agency is pressuring Greece’s eurozone lenders to provide enough relief to ensure the battered country can pay its bills.
There is a new breed of bond in the fixed income world. It’s different, it’s bold, it’s the so-called green bond market. As the drive towards environmental, social and governance (ESG) investing continues to gather pace, policy makers and investors alike are waking up to the importance – and benefits – of green bond investing.
This Newsletter has suggested in the past that investors avoid bonds, and it is likely that bonds will become even worse investments in the near future. The geniuses at central bank headquarters in the US, EU and Japan have created a situation that makes it extremely risky and unprofitable to put money in bonds. Not only have bond purchases by central banks distorted the bond market but the ZIRP and NIRP implementation has resulted in central banks not being in a position to combat the next recession. The present policy of the Fed to raise interest rates in a sluggish economy will only hasten the arrival of the next downturn which has already started in some sectors.
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Technically speaking, the US 30 years government bond yields curve, from a long term point of view, is still in a bear market. But looking on a short and medium term basis, we must consider some elements to understand if prices could be in a retracement phase of a potential short term rising trend. First of all, the 30 years Treasury curve, the week that Trump was elected, advanced with the most highly percent daily change in 30 years (1). The price broke the medium term downtrendline (2) but was not able to overcome the previous high around 3,25 of June 2015 (3).
Recent years have seen strong growth trends in the European corporate debt markets. This has provided a solid base for EHY to grow, becoming increasingly diversified with improved overall credit quality. Rather unsurprisingly, it is more appealing to investors as a result. With two full credit cycles since the late 1990’s behind it, the EHY sector is now an integral part of the global leveraged finance market. It may still be perceived as the smaller sibling of US High Yield, but that masks how fast it is growing and maturing.
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