Fixed Income Outlook Q3 2020
Q3 Outlook: Taking stock
With markets rallying so strongly, companies have been quick to exploit the demand from credit investors through record new issue volumes, with most now finding themselves in a strong liquidity position.
When we became more constructive on credit during March’s COVID-19 ‘crash’, we highlighted three key concerns that we thought would affect markets for the foreseeable future:
• Companies with unsustainable capital structures
• Virus ‘echoes’ and the risk of a second wave
• Sovereign rating risks, given the enormous fiscal policy response
Following the second quarter’s sharp recovery in risk assets and economic growth, all three feel as valid today as they did in the midst of that tumultuous period.
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