Nearly half of participants involved in credit rating agency Fitch’s most recent European Senior Fixed Income Investor Survey said they expected corporate bonds to be negatively impacted by Solvency II regime when it reached implementation. The proportion expressing this view, 46%, marked a slight increase from responses in previous surveys.
In the third quarter of 2010, 44% of respondents said corporate bonds would be adversely impacted.
Clara Hughes, director of insurance at Fitch, said the proposed regulatory regime would have wide-reaching implications within the sector.
“Solvency II brings in explicit capital charges on assets for all European insurers for the first time. European Economic Area sovereign debt is currently proposed as one of the few asset classes to be exempt from direct charges.”
Elsewhere the survey showed that high yield optimism was strong but also showing signs of fading. The share of survey respondents expecting improvements in fundamental credit conditions for high yield reduced to 40% from 53% in the first quarter of 2011.
The asset class continued to shine as participants again voted speculative grade the most favoured, although by a lower margin versus other segments.
Views on credit fundamentals were also more subdued than in the previous quarter and commercial lending conditions for the asset class were believed to be tightening somewhat.
The survey was conducted between 31 March and 2 May and gathered 73 responses representing the views of managers of an estimated $4trn of fixed-income assets. More than 80% of participants were fixed income and investment managers, heads of fixed income research, or strategy, asset allocation or other senior managers from the largest asset management companies in Western Europe.
