European Market

The European debt market is in very precarious position for a while now. The innovative monetary policy of the ECB has pushed real yields into the red for the vast majority of bonds on the market. The extraordinary market interventions, including those connected with Covid-19, have cause some distortion in the bond market where public finances appear to outpace the private ones.

The government investments are funneled to high security bonds, which flattens the yield curve for that segment. However, the mid- and- high risk bonds – approx. EUR 1.5 trillion ($1.8 trillion) do not benefit from that situation. The liquidity for high-yield debt in Europe is shrinking as uncertainty increases.

Deriveum Europe addressable market is precisely the corporate bond segment in Europe that still provides real yield. That segment is not able to benefit from the lavish public help, while it needs to provide certainty to investors.

Still, the regulators will hard-cap Deriveum Europe to about EUR42 billion (3% of the addressable market) to prevent default waterfalls and keep the systemic financial stability in the Euro-area.


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