Sterling credit traders and lenders might have expected a scramble on Monday morning after the resignation of UK Prime Minister Kier Starmer, but it was largely business as usual with credit market participants having priced in such an eventuality. Some though are already looking ahead to his likely successor and what ensuing policy changes could mean for credit sectors.
“I would love to tell you that there are loads of things repricing but I'm afraid if there are I've not spotted them,” said one sterling credit trader.
This might signal a market priced to perfection (and no shortage of great foresight). Indeed we reported last week on the ascension of Andy Burnham, the frontrunner to replace Starmer, and how a government under his leadership might intervene in the restructuring of Thames Water.
What happens after this is less clear. Some private credit lenders see a glimmer of hope for the UK’s languishing defence credits. Homebuilders may also be impacted if Burnham follows through on his ideas for affordable/social housing. Likewise UK infrastructure expansion (beyond London) might need support from private lenders.
In defence of defence
Strange straws often break British prime ministerial backs. Boris Johnson, once seemingly able...
