| Headline: Euro corporate bonds - How we learned to love event risk Source: Euromoney magazine Date: January 2000 Author: Marcus Walker Investors in euro corporate debt have had a rollercoaster ride. They've gone from europhoria to nursing burnt fingers, and to drawing the lessons for 2000. As if buying endless new credits wasn't complex enough, they are simultaneously having to understand and predict the course of Europe's M&A boom. How do you cope in a market that's fast-growing, unbalanced and full of nasty surprises? Marcus Walker profiles four of the top asset managers to find out When Standard & Poor's downgraded Mannesmann from single-A to BBB+ on November 24 following the German company's bid to buy the UK mobile-phone operator Orange, it caused howls of pain in the offices of bond fund managers all over euroland. Many had considered familiar names like Mannesmann to be the safe way to transform their government-bond holdings into a credit portfolio. Instead, they realized that Europe's soaring M&A activity can hurt creditors of higher-grade companies. Shareholder value can mean bondholder losses. Bond fund managers have also struggled with the fact that while they typically have to manage risks against a bond index, euro corporate indices are poorly diversified and patchy in their liquidity. |