Tesco's bond purchases comes at a key moment for fund managers who hold a high-yielding European debt, as companies like Tesco exempt speculatively the debt.
The shrinking of the European low-quality bond market reflects the growth of investors who require a higher credit rating.
Anglo American plc emerged from Bank Of America Merrill Lynch's high-yield bond index at the end of August while at the same time Telecom Italia is on the verge of becoming another "rising star" - a term used for companies that acquire a higher investment class.
The supermarket chain in the UK TESCO has announced this week that it will pay up to 700m pounds of bond debt because it looks like it aims to strengthen its balance sheet and regain its investment status.
Telecom Italia bonds make 4.25% of the index of high-yielding eurobonds and if combined with Tesco, Arcelor Mittal, Leonardo-Finmeccanica and ThyssenKrupp, which are marked as "rising stars", they reach 9%
Source: Financial Times
Jr Trader Petar Milanov
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