Now that the ECB has announced its decision on 24/01/2019 to leave interest rates at 0%, it is unlikely that German government bonds, hitherto so popular, will regain their attractiveness again this year.
This is not the case with corporate bonds though. Once the market has completed its adjustment, there will again be enough interested parties in the bond market to be able to successfully place an issue. With an average interest rate of around 5% pa, the default risk for high-yield bonds has meanwhile dropped below the long-term average. The default risk worldwide was 14% during the 2008-2011 financial crisis, today it has dropped below 6%. “Companies that enter the capital market with bonds today are much better prepared by their advisers,” says Günter Jucho, member of JCC AG’s Board of Directors.
Corporate bonds also featured as the subject of a discussion round at the World Economic Forum in Davos, this time from the USA’s perspective. Similar to the German-speaking region, about a quarter of subscribers are foreign investors, followed by investment funds, insurance companies and pension funds.