Volatility returned as the new variant caused concern. We have been here before and presumably we need to get used to them.

How dangerous this one turns out to be remains to be seen but it has certainly caused worries about the effect it, and associated restrictions, might have on growth projections or plans of central banks. Those plans remain a bit hazy especially when it comes to the Bank of England but with a current CPI of 4.2%, forecast to rise to 5% in short order, the MPC has no room for complacency.

The combination of variant volatility and the Bank’s decision not to satisfy market expectations did slow issuance into Sterling but a handful of issues priced with relative ease. We switched out of some CIBC short dated floaters into a new issue covered 2025 FRN from DBS Bank paying a healthy SONIA +100bp. We sold the last of our Heathrow Funding 28’s, fortunately ahead of a little travel restriction related widening and cleared out the balance of our Credit Agricole T2’s. We reduced some of our mainstream infrastructure exposure, selling some HICL and GCP.


The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.

Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.

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