Fed Rate Hike May Cut Foreign Demand for U.S. Company Bonds

September 12, 2016 7:47 PM

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Demand from foreign investors for bonds from U.S. companies that has helped keep a lid on corporate America’s borrowing costs may dissipate if the Federal Reserve raises interest rates.

That’s the conclusion of Deutsche Bank AG strategists who say that multiple rate hikes in the U.S. would increase currency hedging costs for foreign buyers of U.S. corporate bonds, stripping away their appeal for investors seeking refuge from $11.7 trillion of negative-yielding debt.

Also read: ECB’s Mario Draghi Hints at Extension of Bond Purchases

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