A lot can change in a month. While many of us grapple with the new daily regime of lockdowns, remote working, home schooling and scouring the shops for that last fabled toilet roll, it’s worth taking a moment to review what has happened to credit markets over the past few weeks.
Even in social isolation, one would be hard pressed to miss news headlines reporting the sell off in equities and… Read the article
We started 2019 with credit at levels we perceived to be pretty cheap. The run since then has been remarkable, with spreads today close to all-time lows. What should one be doing with credit risk at this point?
There are reasons to remain bullish on credit, and fully invested. First, we remain in a goldilocks economic environment for bonds, with low growth and low inflation. These economic … Read the article
Financial markets can be a scary place for investors. The US economy is now in its longest expansion on record, the world is seeing record level of total debt and now even some corporate bonds have negative yields.
If you’ve carved a pumpkin, got your Halloween costume and been to see the latest scary movie, there’s only one thing left to do: take a look at the Bond Vigilantes team’s 2019… Read the article
With Brexit in every headline, it’s hard not to form an opinion on the possible outcome for the UK. Investors are getting increasingly edgy about the impact on certain asset classes, and I have read many articles predicting which sectors will do well in various exit scenarios. Sterling credit has remained healthy since the referendum, led by robust fundamentals and not by politics as the pound … Read the article
The positive and negative effects of central bank intervention after the 2007-08 financial crisis have been widely debated and are still – ten years on – not fully understood. For example, keeping borrowing costs artificially low for years has certainly helped spur economic growth (great), but by incentivising companies to take on more debt (not so great). The debt increase also makes me questi… Read the article
November is proving to be even worse than October, especially for Credit markets, amid plunging oil prices, corporate woes, executive scandals and protracted unconvincing economic data, all on top of a global interest rate rising cycle. Corporate bonds, which have been supported by loose monetary policy for over a decade, particularly felt the cold: US Investment Grade (IG) spreads last week po… Read the article
Last Saturday marked exactly 10 years since Lehman Brothers went bust. Are we still suffering the consequences of the Global Financial Crisis that followed? Had the crisis not occurred, would we have today’s political uncertainty? Watch M&G fund manager Wolfgang Bauer and Investment Director Ana Gil discuss how the clash between growth and political risk are driving markets today, and what oppo… Watch the video
The Bank of England’s (BoE) Term Funding Scheme (TFS) came to an end earlier this year. As a brief recap, the scheme offered four year funding at the BoE Base Rate plus a fee to the banks and in turn, the banks were required to lend into the real economy (the fee was dependent upon the net lending of the bank). We previously wrote about the scheme here and here.
The borrowing scheme has been hu… Read the article
In its 2016 Annual Report entitled ‘making tomorrow a better place’, Carillion claimed they had ‘a good platform from which to develop the business in 2017’. Less than ten months after publication, Carillion went into compulsory liquidation, bypassing administration and the chance to continue trading. Assets will be realised and distributed to creditors, leaving little or no value remaining. Bu… Read the article
It was the best of times, it was the worst of times – to phrase it in a Dickensian way – for bonds of British automotive and aerospace components company GKN. After Melrose Industries, an investment firm specialised in turnarounds of manufacturing businesses, had made an unsolicited takeover bid for GKN on 8th January, GKNLN 3.375 05/12/32s have enjoyed capital gains of 1.7%, whereas the cash p… Read the article