The first quarter of 2011 has been one of mixed messages in the debt markets. Defaults are falling and corporate bonds began the year with record volumes in the US. Rising risk appetite saw high-yield debt have a brisk start to the year, and volumes are rising in emerging markets. But fear about bail-in proposals in Europe has led to record volumes in the covered bond markets as investors look for assets that will not be subject to new rules. The US municipal market, too, saw record outflows - with more than $20bn withdrawn from muni funds in the 10 weeks to the end of January.
Emerging markets up
