ANALYSIS-Banks rethink may prompt investor return from junk

In a separate take on the corporate debt theme, Reuters Investment correspondents detailed on July 29 how relief after Europe’s bank stress tests could see many funds seek bank-heavy investment grade paper again – having migrated to junk bonds earlier this year in part to avoid the renewed concerns over the European financial sector. Reuters weekly preview from July 16 was also a prescient call on how markets and asset managers were likely to greet EU bank stress test results on July 23. Including quotes that said the releases would likely be seen as a “circuit breaker” for the European sovereign debt crisis, the piece presaged a post-tests 10% rally in European banking stocks, a drop in both bank and sovereign cash and CDS spreads and acceleration of the euro currency impressive 10%+ rally from mid-June.