TwentyFour

When government finances deteriorate, how much of that risk should be priced into the borrowing costs of otherwise healthy businesses?

French government bonds (OATs) keep on breaking records and psychological barriers, with the latest being 10-year yields smashing through 5% for the first time since 2002 this week.

This week a small Austrian lender, KommunalKredit, brought to the market a €150m Additional Tier 1 (AT1) transaction.

September’s surge in high yield (HY) issuance tested the limits of investor appetite in an evolving market.

It has been another strong year for European asset-backed securities (ABS), and securitised markets have looked through the recent rates volatility well, with spreads broadly stable across the capital structure in Q3 2026.

France has been the primary focus of the European rates markets in the past week, with domestic political risk and debt concerns adding to a general sell-off across government bonds.

Fixed income investors have had to adjust to a dramatic shift in market conditions as the year has evolved.

E-commerce platform InPost has entered the European high yield (HY) market this week with a new seven-year senior secured bond as part of a €3bn financing package to help fund its acquisition by an Advent led consortium.

Looking at the sharp moves in government bond markets in recent days, one would be forgiven for thinking we are seeing some level of forced selling that is pushing valuations lower.

Prediction markets suggest the Democrats are capable of gaining a majority in both the Senate and the House of Representatives at the US midterm elections on November 3, with Polymarket putting the chance of a “sweep” at 64% as of Friday morning.

With two-year UST yields at around 4.7%, we think short end yields are offering an attractive potential hedge against both downside growth catalysts and lower oil prices.

Felipe Villarroel delivered the keynote address at TwentyFour Asset Management’s Annual Fixed Income Conference in London on 17 September 2026.