Improving economic growth the stimulus for investor demand

We believe 2010 will be another good year for corporate credit but we do not see the double-digit returns for UK investment grade corporates being repeated.

We continue to believe risk premium spreads will move lower, and more in line with previous levels as seen before the credit crunch and the resulting lack of liquidity disruptions. An environment of gradually improving economic growth prospects and benign inflation should help support investor demand for higher yielding securities. Issuance of corporate bonds reached record levels last year and, while large by historic levels, we do not expect this to be repeated in 2010. Encouragingly, the demand for corporate issuance has been very high with issues being oversubscribed many times. M...