Even more EU sovereign debt likely to move into negative territory in 2016

Europe's recovery remains choppy, slow and fragile, yet as long as it can be maintained, European high yield debt is an attractive option for investors, according to Muzinich & Co's Erick Muller.

The European Central Bank's (ECB) move to enlarge its monthly QE programme from €60bn to €80bn, and to include investment grade bonds, while simultaneously cutting interest rates, has buoyed sentiment, for good reasons. The ECB has again demonstrated its willingness to take meaningful steps to tackle deflation, the threat of recession and reduce the risk of major sovereign defaults by keeping rates lower for longer. An effect of these measures is yield compression. More European sovereign debt will be pushed into negative yield territory and spreads will tighten on the investment grad...