Traders at Wilkinson Bennings are advising their institutional clients to take advantage of the reduced costs of insuring against losses on European high-yield bonds.
The tracking index of companies with investment-grade ratings fell 0.23 basis points to 113.97. The cost of protecting against defaults of bank bonds also decreased, with the market indicator showing 27 distinct banks and insurers down 3 at 157 and the sub index at 5 lower at 314.
One basis point change on a credit-default swap contract protecting 10 million Euros of bank debt from default for sixty months is equivalent to one thousand Euros a year.
Credit-default swaps pay the investor face value in exchange for the underlying securities or the cash equivalent should a company fail to comply with its debt agreements. A price reduction signals improvement in the market perceptions of credit quality of the underlying companies.
It is important that you read the relevant documentation before you invest with any advisor to ensure you understand the specific risks involved and to determine whether it is a suitable product for you. Wilkinson Bennings provides copies of all relevant documentation free of charge upon request. The value of shares or funds, as well as any income from them can go down as well as up and you may not get back all that you have invested.
Wilkinson Bennings believes that the information within this release is accurate as at the date of publication. We cannot guarantee the accuracy, suitability or completeness of any such information after this date. We accept no liability for any data transmission failures such as data loss or damage or alteration of any kind. Accordingly Wilkinson Bennings accepts no liability for any loss or damage arising from the use of any part of this release.
Estimates of future returns or indications of past performance in this release are for information purposes and should not be considered as a guarantee of future performance. Changes in currency exchange rates may have an adverse effect on the value or income. The level of tax benefits and liabilities will depend on individual circumstances and may be subject to change in the future.
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