UK corporate bonds headed for biggest monthly selloff since 1990s

BY Reuters | CORPORATE | 09/28/22 04:58 AM EDT

LONDON, Sept 28 (Reuters) - UK corporate bond prices are headed for their biggest monthly fall since the 1990s, two indexes showed on Wednesday, as the fallout from the British government's "mini-Budget" reverberates across markets.

The Markit iBoxx Sterling Corporate Bond Index has fallen 10.2% so far in September to a price of 296, putting it on course for its biggest monthly slide since at least 1999.

The ICE BofA Sterling non-Gilt Index, which measures the prices of investment grade debt, is headed for its worst monthly performance since records began in 1997. It is down 9.8% in September with a price of around 337 at Tuesday's close. (Reporting by Tommy Reggiori Wilkes and Lucy Raitano; editing by Dhara Ranasinghe)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.