Managers forced to raise cash as euro bond issuance dries up

Corporate bond fund managers have been forced to build high cash positions in their portfolios after new issuance from European companies dried up over the past month.

According to data providers Dealogic, issuance from Continental European corporates reached only $7.1bn (£4.86bn), a 75% fall from a typical month and the lowest monthly figure since 1995. It is a similar situation in the UK. Cazenove reveals only £5.5bn of investment grade sterling bonds - excluding financials and AAA-rated - have been issued this year. This has caused many managers taking inflows from clients to scour the secondary markets, or build up cash. Darren Reece, an investment grade credit manager at Gam, says the fall-off occurred largely because of uncertainty around t...