Tag Archives:

corporate bonds


Mind the gap: what record low recovery rates mean for high yield investors

In order to assess value in credit markets, bond investors usually make some assumption about the future path of corporate default rates. This assumption generally stems from macroeconomic forecasts (strong/weak growth = low/high defaults rates) or sector specific events (like oil price movements). Following this, it is possible to get an indication of whether investors are being over- or under…

Read the article

Volatility for U.S. hospital bonds ahead

As the rhetoric of the U.S. presidential race heats up over the summer campaigning months, one topic we are likely to hear much on is health care.  Health care in the U.S. is always a highly charged political subject, and now even more so with extra scrutiny on prescription drug prices and continued debates over the Affordable Care Act (ACA) or Obamacare.  Obamacare is deeply unpopular with the…

Read the article

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…

Read the article

The perpetual bond market in Brazil is misrated

In developed markets, the vast majority of perpetual bonds are contractually subordinated, i.e. it is stated in the bond documentation that they are junior to any senior secured or unsecured debt, and as a result they tend to have lower bond ratings than senior bonds in the same capital structure because they have a lower expected recovery value. In emerging markets, however, it is not uncommon…

Read the article

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…

Read the article

A video from our NY research trip examining the US healthcare sector

It has been a while since we last uploaded a video from one of our U.S. research trips. Richard and I recently travelled to New York to meet with various local analysts and strategists. The timing of the trip could not have been better: the Federal Reserve needs to decide whether and how to continue its rate hiking cycle and event risk in the economy is high. We had the opportunity to discuss a…

Read the article
Fossil fuels – The end is nigh

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…

Read the article

Russia Trip Notes – catching a cold but still standing up

Russian corporate bonds were one of the best performing asset classes last year, with a total return for the JPM CEMBI Russia index of +26%, despite Russia’s GDP dropping by -3.7% on the back of a hugely challenging economic backdrop and geopolitical headwinds. I recently spent a week in the cold of Moscow’s early spring, meeting banks and corporates to help me assess whether the economic sanct…

Read the article
Blog_WB_2015 IG-Spread-Performance1

Investment grade credit spreads spinning wider

We recently blogged about the uninspiring performance of many fixed income asset classes in 2015. Investment grade (IG) corporate bonds certainly had a tough year as credit spreads trended wider, both in the USD and the EUR market. Taking a look at option-adjusted spread (OAS) levels, USD IG credit (+29 bps) marginally outperformed against EUR IG credit (+36 bps) in 2015. In both cases periods …

Read the article
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…

Read the article