60 seconds on three reasons for optimism about European credit in 2015
In the latest 60 second video, European and UK fixed income manager Mike Scott reveals the three factors behind his optimistic outlook for European credit for the remainder of 2015.
For the rest of 2015 we continue to have a positive view on European credit markets, which is driven by three factors:
- Economic growth is on an improving trend
- Inflation is bottoming out and should increase from this point
- The European Central Bank monetary policy will remain highly accommodative well into 2016
This means that the number of companies defaulting on their debts should remain low.
European and US credit markets diverging
We think company management teams will continue to remain bond-holder friendly.
They are not indulging in the same level of mergers and acquisitions that we have seen in the US, nor are they increasing dividends at the same rate as companies in the US.
Overall, we are seeing a divergence in credit quality between the two markets and that is the reason why we continue to prefer European credit.
Important information: The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This article is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the amount originally invested. Issued by Schroder Investment Management Limited, 31 Gresham Street, London EC2V 7QA, which is authorised and regulated by the Financial Conduct Authority. For your security, communications may be taped or monitored.