Managers remain bullish on corporate bonds

SECTOR WATCH

S&P Fund Services highlights encouraging outlook for corporate bonds sector during the current uncertain economic environment

Against a backdrop of liquidity concerns, as it temporarily dried up in all risky bond asset classes in May 2010, our annual review of the UK fixed income sector highlights the encouraging outlook for corporate bonds. Overall, fixed income fund managers remained positive on credit markets and potential future setbacks were deemed of temporary and relatively benign nature. Healthy corporate balance sheets and strong cashflow generation continue to support the asset class, although a number of managers were wary of lower-quality issues (CCC and below), not pricing in increased risks of a d...