Will the ECB's superficial bond-buying 'bull' boost credit markets?

The European Central Bank recently announced a further set of measures intended ultimately to increase the rate of inflation, which includes the corporate sector purchase programme (CSPP), a plan to buy euro-denominated corporate bonds that will be launched at the end of June.

The prospect of a determined, deep-pocketed buyer in primary and secondary bond markets sent credit spreads tighter as it triggered a land-grab for credit. When an exogenous factor like the CSPP is driving credit spreads, valuations become distorted. For example, approximately 10% of European IG credit is offered at negative yields. We do not believe chasing idiosyncratic and/or liquidity risks is the correct response to this valuation anomaly. Rather, mandate-permitting, there are other options out there in order to deliver superior, risk-adjusted returns. From here, European spreads...