Fixed income in 2016: The cracks have started to appear

Increasing signs of stress have been creeping into credit markets says Matthew Dickens, senior research analyst at Ingenious Asset Management.

Whether it be signs of decreased investor demand with the failed LBO of Veritas by private equity firm Carlyle and the failure of Vodafone to issue a 30-year USD bond in November, or the sharp increase in default rates seen in 2015, cracks are starting to appear. A reduction in demand for corporate debt is not necessarily a bad thing for investors. The years since the financial crisis have largely been an issuers' market, with the voracious appetite from investors for companies' paper leading to a downturn in covenant strength. One swallow does not make a summer and it remains to be s...