Central Bank talk supported the market with all credit compartments reaching higher prices/lower spreads.
However, after a broad non-selective rally in the 1st month of the year, the market became more selective in February and March re-establishing proportions amongst issuers.
We have modified our views to reflect the market and geopolitical changes.
We are now more cautious on continental European issuers and in particular in France while we are more supportive of US based and EM issuers.
The current geopolitical environment plays a key role in shaping our views on the qualitative aspect of our research, ie we see a constant deterioration of creditors rights and protection in EU countries in particular in France and Nordics.
High public debt combined with a broad credit weakness in strategic sectors and nationalist governments are allowing for a de facto war economy which favours continuation over default of strategic issuers hence a lower creditor protection.
Our research emphasises short term maturities with single industrial businesses, away from the financial sector, as the most solid form of credit available in the markets.