Gaps in relative value between the sterling, euro and dollar bonds of any one issuer can be absent for extended periods.
With the ECB likely to be buying corporate bonds in secondary and primary markets from the end of this year, any difference in relative values between euro and sterling bonds from the same issuer is unlikely to exist for long.
While European corporate bonds have their attractions, it is important that UK investors do not forget what is driving the need for this second instalment of QE in the Eurozone.
The region’s troubles also put a spotlight on slowing UK growth and the increasing risk of recession.
It is not an environment in which credit would typically thrive.
We are looking to add to funds - companies with proven track records of coping well in downturns. Good asset quality and good governance are among the best indicators of star quality.
Luke Hickmore is investment director of fixed income at Aberdeen Standard Investments
