Thanks very much for another bumper stack of entries to the annual Christmas quiz. This year’s winner, and new reigning champion is Jake Lewis of Morgan Stanley. Congratulations, we will be in touch to see where you’d like the £100 charity donation to go. You also win the Morrissey novel, as do the following brave runners up. Gary Callow of Investec, (2014 champion) Marton Huebler of Fidel…Read the article
Following the closure of the Third Avenue fund earlier this month, liquidity issues are once again at the forefront of investor’s minds when it comes to the high yield market. Ultimately, conditions will only improve with structural changes to the market but in the meantime we think there are several steps that can be taken to help improve the underlying liquidity profile of a high yield portfo…Read the article
One of the major factors that has enabled inflation to stay low despite the economic strength in major western economies has been the fall in the price of oil. Given the huge price volatility over the past 18 months it is interesting to depict the falling influence of oil on actual end inflation.
In the UK, the most direct way that changes in the oil price affect inflation is through petrol pri…Read the article
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…Read the article
With the Fed recently raising its interest rates via a unanimous vote, I’ve been wondering whether the UK will shortly follow suit. The market seems to think not, pricing in the first UK rate rise in Q1 of 2017, compared to two further US rate hikes in 2016. At face value this huge divergence feels strange; both countries are targeting (and undershooting) a 2% inflation rate, both have similar …Read the article
This weekend the team were doing more than just our Christmas shopping, we were also saying a fond farewell to one of our favourite investments of recent times – our Granite Residential Mortgage Backed Securities (RMBS).
Granite was the name that Northern Rock gave to the vehicle it used to securitise the mortgages that it originated before blowing up in 2007 – when it was no longer able to fun…Read the article
We did a research trip to Tokyo last month. The main discovery by my colleagues Anjulie Rusius and Anthony Doyle was that I am “annoyingly good at karaoke”. I have to put my hands up to that one. Sadly for you my singing didn’t make it into the official trip report video. Instead we discuss why, counter to popular myth, Japanese policymakers might not want either a) a much weaker yen or b) any …Read the article
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
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…Read the article
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 …Read the article