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markets and players

Shaky foundations: the European high yield construction sector

Guest contributor – Saul Casadio (Credit Analyst, M&G Investments)

While European High Yield has delivered a robust performance over the last two years, returning on average 4.9% per year, one part of the index has significantly lagged. Over the same period bonds issued by construction companies have returned an average annual return of -18.4%. The chart below shows that, out of seven issuers i…

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10 years of the M&G Bond Vigilantes blog. A new book and fundraising for Cancer Research UK.

Today is the 10th anniversary of the Bond Vigilantes blog.  Here’s a look back at the incredible changes to bond markets and monetary policy that we’ve been through over that decade.  Also today we are launching our new book (the difficult second album) in support of Cancer Research UK.  There’s a link to our Just Giving page at the bottom if you like what we do and can spare a few quid.

My fi…

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Changes in corporate bond market liquidity and the opportunities they present

One of the prevailing features of the last few years has been the increasing prominence of discussions regarding market liquidity and the seemingly downward trajectory it has taken across fixed income markets. This had led many market participants to question the resulting implications for market stability and volatility.

It makes sense then to try and understand the driving factors behind thes…

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WTI Crude Oil futures curve

Damsels in distress – Chesapeake and distressed exchanges

2009 through 2013 were some very good years for the US high yield market. And the energy subset was no exception. Returning  51%, 13%, 9%, 12% & 6% in each of those years, it’s not surprising that the BofA Merrill Lynch US High Yield Energy Index practically trebled in size. Voracious issuance, much of it to fund shale oil development, was met with equally intense buy-side demand and with it ca…

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15.12.15 SI blog1

Leverage ain’t always a shareholder’s best friend

The temptation to ‘juice-up’ shareholder returns with low yielding corporate debt has been too much to bear for many companies and their investors in recent years. This fad has been well documented and though it may not be a trend we creditors like to observe, we haven’t been entirely surprised to see it play out in 2015 given the seemingly large valuation disconnect between the cost of debt an…

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Bullet dodging – European high yield in 2015

Bullet dodging – European high yield in 2015

As the year draws to a close, 2015 has actually been a solid if unspectacular one for the European High Yield market. Total returns of a little under 3%* compare well to negative returns in the US and Global High Yield markets. European default rates also continue to trend lower, hitting 0.14% for the last twelve months to the end of November according to data from Bank of America Merrill Lynch…

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15.12.08 WB blog UK

Pharma merger mania: The good, the bad and the ugly

In our recent Chicago video we touched upon the subject of recent mergers and acquisitions (M&A) activity in North America having surpassed pre-crisis volumes. Though hard to quantify, it’s safe to assume that the M&A surge has been one of the main driving forces behind the widening of credit spreads in the USD investment grade (IG) corporate bond universe this year. Numerous IG companies have …

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Beware of the pitfalls in US high yield retailers

The fact that commodity-related sectors, like metals & mining and energy, are the highest-yielding and worst performing sub-sectors this year in the broader high yield Index is no surprise. There is a high degree of distressed credits in these sectors suffering on the back of the current low commodity price environment. S&P recently released its summary of sectors with the highest distressed ra…

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US companies are scared of risk

Happy Halloween. Five scary charts that Freddy Krueger would be proud of.

M&G and bondvigilantes.com proudly present the scariest charts on the global economy. Some will make you laugh, some will make you cry. You will be amazed, you will be enchanted, you will be mystified, you will be amused. Of course, the following is not for the faint of heart. You have been warned.

  1. Companies are scared of risk

There has been a glut of corporate bond issuance since the financ…

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BHP turns to the bond markets for help

BHP turns to the bond markets for help

It has been a rough ride for metal and mining giant BHP Billiton. Revenues have come under persistent pressure due to weakening commodity prices. Despite one of the strongest balance sheets in the sector, promises made to shareholders have proven tough to keep.

With these commitments in mind the company turned to a nervous bond market earlier this week for some $6.44bn equivalent of hybrid deb…

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