Europe

With commercial real estate continuing to suffer the effects of the COVID pandemic and inflation, Elena Rinaldi looks at one CMBS transaction highlighting the challenges facing the asset class.

When Wall Street’s army of analysts were publishing their outlooks for 2023 back in November, there was very little love for Europe.

Having done its job of delivering lower volatility and better performance than mainstream bond markets in 2022, the income and defensive characteristics of European ABS look equally compelling in 2023, says Doug Charleston.

With commercial real estate seen to be in the eye of the storm as interest rates rise, Aza Teeuwen looks at the potential impact on CMBS and CRE loans and highlights where valuations could be most at risk.

European ABS is enjoying a spurt of new issuance and a parallel rally in spreads, with investors having entered the new year with cash to invest and buoyed by renewed hope around inflation and monetary policy, says Pauline Quirin.

With projections for European growth and inflation being hastily revised in early 2023, the region’s bonds are still paying investors a premium that may not be around for long, says Dillon Lancaster.

While European ABS was not immune to negative returns amid the considerable fixed income headwinds of 2022, it gave investors largely what they look to this allocation for – lower volatility and better performance than mainstream bonds.

After shocking investors in November by floating the idea of deferring its hybrid coupons, AroundTown has begun 2023 in similar fashion with a senior bond tender, says Pierre Beniguel.

In our latest blog, Pierre Beniguel looks at the implications of AroundTown’s corporate hybrid non-call and the shock announcement that it will also consider deferring coupon payments.

In our annual ‘Rodney Blog’, Eoin Walsh says that with rates now offering both yield and downside mitigation, and credit yields at near-decade highs, fixed income investors could enjoy strong returns in 2023

UBS announced a call of its low-reset 5% Additional Tier 1 (AT1) notes on Monday, showing call risk in the AT1 sector isn’t just a matter of economics, says Dillon Lancaster.

Chris Bowie explains why he believes analysing starting yields can explain improved returns over the next five years