No Signs That Yield Chasing Is Coming To An End

Yield chasing: Guest post by Jonathan Rochford, CFA, Portfolio Manager of Narrow Road Capital Pty Ltd

The recent long tenor debt issues by Saudi Arabia and Italy are both great examples of yield chasing. Saudi Arabia issued $17.5 billion across 5, 10 and 30-year bonds into $67 billion of demand. Some of the proceeds have been used to repay creditors that the country had been stringing out for months. Saudi Arabia has been struggling since 2014 following the oil price collapse. 80% of its government revenues and 90% of export earnings come from oil products. Saudi Arabia’s ruling family had been doling out higher payments to citizens to keep the peace, but an austerity program is now being implemented....