The European Central Bank's corporate-bond purchases have buoyed highly rated corporate bonds during the sell-off precipitated by Britain's vote to leave the EU. Average yields on investment-grade corporate bonds hit 0.9285% on Wednesday, their lowest point since Bank of America Merrill Lynch began to record data in 1998.
The European Central Bank's corporate-bond buying program could grow the European corporate-debt market twofold over the next five years by fuelling the sale of €2.5 trillion of investment-grade bonds, Bank of America Merrill Lynch predicted Monday. The market has already seen an influx of euro bonds issued by US companies looking to benefit from low borrowing costs.
Negative interest rates have pushed 23% of bonds in the global fixed-income market to negative yields, a significant increase from the start of the year, say analysts at Bank of America Merrill Lynch. Investors are expected to be driven to riskier assets as the supply of investment-grade bonds tightens when the European Central Bank begins its corporate-bond purchasing.