Market Void

With interest rates at historic lows, and little room to go down further, why are there no new retail bonds on the horizon? Surely a number of issuers must want to refinance/extend their debt at these levels, and others join the fray, if only for opportunistic reasons. Whilst there is nothing out there, surely this is now the time to get an issue placed at the lowest possible cost? Over to you, Oliver...

Comments

  • I seem to remember reading that the costs and complexity of issuing new retail bonds were increased significantly by George Osborne........one reason why there has been so little activity last couple of years.
    If true, maybe time for a campaign to ask the new Chancellor/Pensions Sec. to amend these rules back to ease retail bonds issue costs, so retail investors get a chance of a few new issues. Did I remember correctly Oliver, or/and is there some other reason why there is a lack of new retail-size issues ?
  • Don't hold your breath for any relaxation in regulation. The EU are currently consulting on a replacement for the Prospectus Directive and their proposals don't seem to offer anything to improve the situation for retail investors in issues of a size likely to be of interest.
    BTW its a little unfair to put the blame for the current position on poor old George - look instead at the EU Commission.
  • Hopefully we will be getting outside the EU's orbit in the not too distant future.

    Enough of governments "protecting us from ourselves"!
  • There surely is still room for rates to go further down. That would of course be into negative territory. Perhaps the yields could still be depressed further yet. The disastrous side effect of the company pension deficits could get worse yet. This would then have a larger effect on company dividends. i.e. They would go down or not get paid at all. The stock market would then fall, causing another rush to safety and bonds values would then go up and yields down. It all sounds quite depressing!
  • Agree, but have to believe that corporates ( and the government) would in that case flood the market with new issues. At some point even the Central Banks would cease to buy this worthless stuff, and then, finally, excess supply over demand will force rates up. Got to be patient and not buy at the top.
  • Shotgun, I agree, we not seen the bottom yet.
    Wait until Xmas before deciding to off-load any my securities where yields sub 2.5%
    Gut feeling we heading into the same problem as Japan, very low interest rates, with no ability to get the "UK motor" to fire on all it's cylinders, therefore inflation will continue to stay low.
    Meanwhile it's been nice to have the current unrealized gains on the fixed income securities
    Your point on Company dividends very valid
    ps only depressing for those not holding securities purchased during 2012-5
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