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Credit Risk Climbs on Brexit for Second Day as Market Shuts Down 

June 27, 2016

Kate Linsell, Bloomberg

Corporate credit risk soared for a second day as investors grappled with uncertainty following the U.K.’s vote to leave the European Union.

The cost of insuring corporate debt against default climbed to the highest in about four months in Europe, amid heavy trading volumes, and the riskiest bank bonds fell. In the U.S., indexes of credit-default swaps extended Friday’s gains to reach the highest since March.

No company offered bonds in Europe on Monday, as financial markets were rattled by the Brexit vote, the subsequent resignation of Prime Minister David Cameron and a lack of clarity about how and when the U.K. will leave the EU. There may be no bond sales of any type this week in Europe, according to a third of market participants surveyed by Bloomberg.

“There is still a lot of uncertainty over what’s going to happen,” said Juan Esteban Valencia, a credit strategist at Societe Generale SA in Paris. “It’s not quite panic but people are concerned. We need to see how the situation shakes out.” Read more

 

 
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