Snowden warns of collapse in bond market liquidity

Kames Capital bond manager Stephen Snowden said liquidity in the investment grade corporate bond market has fallen 80% since 2007, which could create difficulties for managers trying to manoeuvre out of larger positions in this space.

Snowden, co-manager of the £290m Investment Grade Corporate Bond fund, said liquidity has fallen back as a result of the de-leveraging era and investors’ appetite for dividend income. “Net new issuance has fallen dramatically in the investment grade corporate bond market - in the last two years we have seen net new issuance of zero or even negative – and the primary reason for this has been the recent trend for dividend investing,” said Snowden. Investors are turning to equities as they are not receiving their desired income from cash or bond holdings and the market is rewarding cor...