Category Archives:

Corporate bonds

Trump should reappoint Yellen. Also: credit spreads are tight, Tesla, Laffer’s napkin and other stuff.

  1. The Fed Chair choice should be obvious for Trump.  Yellen all the way.  I don’t understand why he would choose Taylor.

President Trump is likely to announce his choice for the next Fed Chair by the end of this month.  Whilst current Chair Janet Yellen is still in the running, she has been slipping down the betting over the past few weeks.  There are three good reasons why (from his perspectiv…

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The decline of covenants in the European leveraged loan market

Guest contributor – Chris Mansfield (Investment Graduate, M&G)

The sustained demand for high yield bonds and European leveraged loans over the past few years, combined with improving corporate fundamentals, has led to strong performance from both asset classes. The large amount of capital available for issuers of higher yielding assets has placed the bargaining power squarely in the hands of th…

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BVTV: Time for a check-up of the US healthcare sector

Heated debates about proposals to repeal and replace Obamacare, generic pharmaceuticals feeling the pain of pressures on drug prices and lingering event risk around potential mergers and acquisitions – there are many reasons to take a closer look at the US healthcare sector right now. On my recent research trip to Chicago I discussed these and other topics with Laura Reepmeyer, Managing Directo…

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State-owned corporate bonds: there is no such thing as an implicit guarantee

A couple of weeks ago, state-owned International Bank of Azerbaijan (IBA) shocked its bondholders by announcing a surprise restructuring. The bank’s capital ratio turned negative at year-end 2016 due to large currency losses as a result of the depreciation of local-currency Manat (AZN). The International Bank of Azerbaijan bonds (IBAZAZ) 5.625% 2019 bonds were trading above par and dropped by 1…

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Is a telecom acquisition spree set to kick off in the U.S.?

Last week, the U.S. Federal Communication Commission (FCC) announced the results of the latest $20 billion, 600Mhz spectrum auction. Communication companies were bidding for spectrum over which they provide wireless services to their customers.  The largest bids came from wireless mobile operator, T-Mobile USA, which spent $8 billion, and U.S. satellite TV provider DISH Network, which spent $6….

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New York research trip: a Bond Vigilantes quick video update

Corporate bond fund managers Stefan Isaacs and Richard Woolnough have just come back from New York, where they spent a couple of days meeting economists and bond market strategists. While they were there, they took the opportunity to film a short video. In it, Stefan and Richard discuss the US bond market, central bank intervention, and the lack of consensus on the outlook for corporate bonds.

 

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Should the Bank of England start buying sterling corporate bonds again?

When the Bank of England’s Monetary Policy Committee meets next week, the market expects that they will cut rates, especially now that even outgoing hawk, Martin Weale (who has been at the Bank for 71 meetings so far, and voted to hike 12 times, and to hold 59 times) says that he will support a reduction.  A resumption of the Funding for Lending (FLS) scheme is also a possibility (many economis…

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M&G Panoramic Outlook: The growing opportunity in corporate bond markets, by Richard Woolnough

Last year proved a tough year for investment grade corporate bonds, with credit spreads moving wider. Fast forward six months to today and the decision of the UK referendum to leave the EU is continuing to shake markets, with European credit spreads now even further elevated. It is nevertheless important to recognise that these bouts of volatility can however present buying opportunities as cor…

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Fossil fuels – The end is nigh

There’s no doubt that the oil industry has seen better days. Adding to present-day woes of price levels of $30-40 per barrel are questions about the long-term viability of the industry’s business model as a whole. Take for example the Rockefeller dynasty and Saudi Arabia, two names synonymous with gigantic fortunes built on oil. Well, the Rockefeller Family Fund just announced its intent to div…

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Which corporate bonds will the ECB buy?

Bond markets have reacted strongly to the 10th March announcement by the European Central Bank (ECB) of its new corporate sector purchase programme (CSPP). Credit spreads of euro-denominated investment grade (IG) corporate bonds have tightened by around 20 bps on average. Still, a lot of the CSPP’s particulars are anybody’s guess at this point. The publication of the account of the last monetar…

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