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2017-12-05 — ft.com

`` A $1tn wave of fixed-income debt is set to mature in Europe, the Middle East and Africa in the coming year, posing a significant challenge for investors searching for returns, according to new research.The debt was raised by investment-grade companies, sovereigns and financial institutions in the aftermath of the financial crisis, when bond yields were much higher than they are now.More than half of the redemptions will be bonds issued by financial institutions, according to research by the bank MUFG, with nearly a third coming from corporate issuers and the remainder from sovereigns and related entities. The bonds have delivered attractive total returns to investors, who now face a less appealing environment for putting their money to work and will probably demand higher fixed rates from borrowers looking to refinance. The Bank of America Merrill Lynch global high-yield index yielded over 8 per cent when the wave of debt-raising began in 2012. It is now returning around 5.3 per cent. The $1tn set to mature next year is the first in what is likely to be several years of similarly sized waves of redemptions, according to Anthony Barklam, MUFG's co-head of debt capital markets bonds and loans.''

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