The return investors expect for accepting credit risk is often thought of as the credit spread, minus the cost of downgrades and defaults. But that neglects the significant benefits that can come from credit spreads tightening as bonds get closer to maturity, also called credit rolldown.
It's now three years since the UK's vote to leave the European Union. Against the backdrop of ongoing political uncertainty, I talked to Bloomberg about the prospects for sterling. Brexit blues have once again taken hold, with the pound down 5% since the start of May, so is it now time to buy with all the bad news reflected in the price?