European corporate debt has been hit by its heaviest pullback on record as fears over persistently high inflation and the threat of a recession send traders dashing out of the market.
Bonds issued by highly rated companies in the eurozone have lost investors more than 10 per cent since the peak nine months ago, marking by far the biggest decline since at least 2000 for an asset class typically expected to deliver much steadier returns than stock markets, according to an Ice Data Services index.
Most of the damage has stemmed from expectations that the European Central Bank will follow the US Federal Reserve in raising interest rates as it grapples with surging inflation. On Wednesday, ECB chief Christine Lagarde signalled she would support raising rates in July.