Increase in M&A activity threaten corporate bonds

markets forum

Fidelity fixed interest manager Ian Spreadbury sees corporate action such as mergers and acquisition...

Fidelity fixed interest manager Ian Spreadbury sees corporate action such as mergers and acquisitions as one of the biggest threats facing the value of company bonds. He argues many UK companies have spent the past few years sorting out balance sheets, which has been a positive for corporate bonds, but the temptation may now be for them to embark on expensive corporate action that could undermine those same bonds. As a result, Spreadbury has built up 25% exposure to bonds that are asset-backed, for instance, secured on rental income flows as a hedge against this possible event risk. He ...