As we fast approach the festive period, many analysts start to reflect on this year and what lies in store for capital markets in 2013. 2012 has been a great year for credit and the year ahead looks bright for this asset class; it is expected to be a continuation of what we had recently, that is, a weakened macro economic scenario and a persistent economic crisis. The latter seems to be improving but definitely not over as analysts are expecting the euro zone to contract by -0.3% next year.

Government bond yields continue to remain anchored at historically low levels and unless they rise significantly and in a sustained manner, the chase for yield is expected to persist and corporate credit will continue to be the most promising class when it comes to risk/reward ratio.

The current economic conditions are helping corporates refinance their debts at lower rates which in turn has resulted in the greater facility of corporates to finance their debt, despite earnings remaining (and expected to remain) under pressure.