Posted inFixed IncomeNORDICS

Danish high yield appetite hits record low

Back in February, 40% of our Danish readers said they would increase their exposure to high yield bonds. In April that number was down to 26%, and our freshest data gathered in June put it at a record low of just 5%. As high yield bonds have traded in quite a flat line this year (see graph), there is no massive sell-off planned as of yet, with 65% of respondents keeping their allocation stable and a quarter decreasing it.

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EMD shift

Denmark’s fund selectors seem to have switched their attention to another higher-yielding bond category: emerging market debt. Appetite for emerging market government bonds hasn’t been this high for two years, with 35% of Danish fund selectors planning to increase their exposure and 45% holding to their positions.

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Noting that Denmark traditionally has a relatively strong focus on bond investments, it is perhaps not surprising that sentiment towards developed market bonds is also markedly above the European average, though it’s still net negative with 35% of local fund buyers selling out of both corporate and government bonds and 10% not using the asset class.

Part of the Bonhill Group.