Covid-19 – our thoughts on the European loan market


Market dynamics remain highly changeable in this unpredictable environment. In the latest update from M&G’s Leveraged Finance team, read about what has been happening in the European loan market and why investors would do well to remember the underlying strengths of the loan asset class during this time of volatility.

  • Loan prices have fallen sharply in tandem with other markets, but with the massive fiscal stimulus packages, has come some purposeful buying – at least in the large-cap, well rated issuers in defensive sectors.
  • Even with a global downturn on the horizon, we would suggest that this is a period of dislocation for loan-prices rather than fundamental peril for large, strong, liquid companies that can wait out the next few months.
  • During this time of volatility, it is important to remember the underlying strengths of the loan asset class.

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The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested.

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