Central banks torn between return and liquidity objectives

Central banks are weighing up lower-rated sovereign debt but staying within relatively safe territory as they seek to balance returns with capital preservation and liquidity objectives in a low-yield environment. Nearly 30% of central banks surveyed expect to increase their allocation to non-AAA investment-grade sovereign and supranational debt within the next 12-24 months, according to a report published in July by UK think-tank Official Monetary and Financial Institutions Forum …