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Brexit Fallout Sends European Credit Investors Into Dollar Debt 

June 30, 2016

Kate Linsell, Bloomberg

Britain’s decision to exit the European Union is sending credit investors across the pond.

Dollar-denominated securities outperformed euro notes since the U.K. voted on Thursday to leave the 28-nation bloc, according to Bank of America Merrill Lynch index data. Goldman Sachs Group Inc. and CreditSights Inc. now recommend buying U.S. corporate bonds.

Investors are seeking refuge as they await Britain’s plan for its extrication from the EU, something that’s being held back by political upheaval in the country following the vote. Some are buying investment-grade bonds in euros on speculation that the European Central Bank will step up its bond purchase program, while others are looking further afield.

“The dollar credit market will almost certainly be seen as a safe haven now, even if it’s only temporary,” said Alex Eventon, a Paris-based fund manager at Oddo Meriten Asset Management which oversees 46 billion euros ($51 billion). “Contagion risks are on the minds of most investors.” Read more

 
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