Could credit spreads widen as a result of political risks?

clock • 2 min read

Despite Europe's proximity to the UK, euro credit has been the least volatile of the three - a fact largely explained by the European Central Bank's (ECB) well-received corporate bond purchase programme, first announced in March which has directly supported the market writes Insight Investments' Adam Whiteley.

In August, the Bank of England followed suit by announcing a comparably scaled programme, which led to a sharp rally in sterling credit spreads. Of course, this volatile ride may not be over given an environment of ongoing political uncertainty.  However, this is not to say that other regions will not also be prone to political risks. In Europe, fringe parties on the left and the right will continue to look to consolidate their growing support. Meanwhile, in the US, the looming presidential election in November poses arguably the largest immediate source of political event risk. Th...

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