Downside risk management is crucial. Volatility and low yields are likely to persist over the next few years as the global economy recovers from the shock of the coronavirus. Navigating this environment will be difficult, particularly as returns from equities
Volatility in interest rates year-to-date has unevenly impacted credit markets. Investment grade credit (IG) weakened in sympathy with sovereign yields, especially in high quality and long duration paper. IG bonds were down -3.6% in the U.S. year-to-date, and -0.5% in
Investors can still find value in the European high-yield bond market even after a more than volatile 2020 in which risk premiums fell. While the starting yield may now look much less attractive, high-yield bonds continue to …
OpinioPro readers found the BNP Paribas AM article the most interesting this week. The article discusses how the switch of many economies ‘’from a depletive to a sustainable model created a wide range of investment opportunities in many areas including water’’. The three main water-related investing …
After a rollercoaster 2020 for European high yield markets, 2021 looks set to be more stable. Fears of high levels of corporate defaults have proved unjustified, allowing high yield to rebound in 2020 and setting the scene for the coming year. While the second Covid-19 wave, and the new variant, are weighing on recovery, once vaccinations bring the virus under control a degree of normality …
Euro high yield: the opportunity today Credit Outlook The upheavals of 2020 have brought structural changes in the euro high yield (EHY) bond market. So, what has changed, what still applies, and what role can this sector play in European
Webinar – U.S. High Yield Strategy Update Kevin Loome, CFA®, portfolio manager of the U.S. High Yield Bond Strategy and Gregor Dannacher, CFA®, portfolio specialist, share insights on how they are responding to these rapidly changing markets and uncovering new
#HighYield On the 4th of January, Columbia Threadneedle Investments published a new edition of their monthly report “In Credit”, this time titled as: “Here we go again”. Speaking about High Yield, Columbia Threadneedle states that technical values remain positive
Credit markets weathered a turbulent year in 2020 as the Covid-19 outbreak resulted in economic shutdowns, plummeting growth and volatile markets. Against this backdrop, fundamentals deteriorated, downgrades skyrocketed and default activity increased. After one of the quickest bear markets in
T. Rowe Price Insights on Global Fixed Income Credit analysis can reveal value in bank loans, high yield bonds High yield bonds and bank loans (or leveraged loans) represent two forms of noninvestment‑grade credit exposure. Both sectors have various strengths and risks
Investment Insights The US election results and the announcement of a potential COVID-19 vaccine from Pfizer have been pivotal events in markets, initially providing a substantial boost to risk assets. Mixed economic data and a rapidly rising rate of coronavirus
T. Rowe Price Insights on Global Markets Our portfolio managers see selective potential in a range of asset classes. Even for those of us who saw reasons for hope this past spring, the market’s resilience in the face of the
"We still like high yield for income. On a tactical horizon, we strongly prefer high yield for its income and more room for spread tightening. We are neutral on IG and underweight emerging market debt."
T. Rowe Price Insights on Fixed Income Downgrades and defaults have had a major impact on the asset class Record volumes of credit downgrades and a sharp spike in defaults have reconfigured the U.S. high yield bond market in the
Webinar – High Yield Valuation Educational Webinar 1 HY: fundamentals and valuations 2 Why GHYS is uniquely positioned for the future Programme 09.00 AM High Yield: Fundamentals and current valuations Bernard McGrath / Senior Fixed Income Specialist; UBP How expensive
“Global default rates are rising and likely to continue into 2021. But we think the full impact may be muted by the significant fiscal and monetary intervention seen from governments and central banks.”
T. Rowe Price Insights on Global Fixed Income Riskier, less liquid securities can bring substantial benefits. When seeking to generate steady bond income during turbulent times, a little flexibility can go a long way. The freedom to invest in a wide
Credit Outlook Downgrades and defaults have had a major impact on the asset class Record volumes of credit downgrades and a sharp spike in defaults have reconfigured the US high yield bond market in the wake of the coronavirus. This
European Gazette Global debt was at an unprecedented level before Covid-19. With the subsequent policy response injecting liquidity into most parts of the world economy, the debt predicament is set for a worse path. We explore the implications for sovereigns,
European Gazette / Summer 2020 As we started Q4 in 2019, we saw the economic cycle coming to an end. We were slightly perturbed that markets wanted to be quite bullish as Q3 numbers showed firms meeting and beating expectations.
Following a historic plunge in Q1, US high-yield corporate bonds delivered strong gains in Q2. The intervention of governments and central banks provided unprecedented support for global financial markets and bolstered investors’ appetite for risk. The market showed technical strength
High-yield bonds often deliver strong returns following a period of crisis – why is that and will it happen in the wake of COVID-19? Due to a higher-risk nature of its constituents (including the greater risk of default), the high-yield
U.S. Treasury yields ended the week modestly lower, led by longer maturities. Markets appeared focused on escalating coronavirus concerns, despite generally stronger U.S. economic data. Rising U.S. virus cases are stoking fears of another lock down and associated slowing in economic
In Credit It was a week of data releases and an opportunity to get a glimpse as to whether an economic recovery is underway. The evidence would so far suggest that this …
Driving optimism in June have been a variety of better-than-anticipated economic reports. Most notably, nonfarm employment rose by 2.5 million, leading to a downtick in the unemployment rate. ISM manufacturing and non-manufacturing surveys each moved up in May. And most
KEY INSIGHTS ESG factors are incorporated into the research process, serving as an important input into decision‑making. The growing importance of ESG in Europe is having a trickle‑down effect on companies. Seeing a greater awareness of ESG among high yield companies,
Executive Summary The coronavirus crisis has understandably caused a great deal of unrest on the financial markets. This article examines the opportunities and threats at times when share prices have fallen sharply in a short period of time, spreads have
Strategy update The volatility of recent months pushed credit spreads well wide of historic norms, peaking around mid-march at levels last seen during the 2008/2009 Credit Crisis. In the face of this market turmoil, the broad US high yield market
The Big Picture Is this a buying opportunity or the half-way stage in a larger slump? The truth is we don’t know, so we have constructed a range of scenarios that see the S&P 500 anywhere between 1400 and 3000 in 12
While much uncertainty remains, one aspect of the COVID-19 market shock is clear: The Fed will not stand in the way of the economic recovery. By the end of March, the COVID-19 global pandemic had a deep and profound effect on virtually
Global HY markets sold off aggressively between February and March in response to the COVID-19 outbreak, the oil price war and the liquidity freeze in some markets. An analysis of past peak-and-trough episodes in the US HY market shows that
A case of “darkest before dawn?” March was a rollercoaster ride for European high yield investors. The market had fallen 20% by the middle of the month, and had recovered to be down 15% since the start of the year
Webinar – High Yield Bonds High Yield Bonds – “Sorting the wheat from the chaff” During the global financial crisis in 2008 liquidity was directed to support the financial system. With the COVID-19 virus this liquidity is directed to support
Cycle, Further, Interrupted. The COVID-19 virus has stalled the mini-cycle rebound and made a global recession likely. While the duration of the virus pandemic is unpredictable, policy stimulus, pent-up demand and a lack of major imbalances argue for a solid
Time for a rethink
Qontigo Applied Research White Paper In a world where some investors pay the government for the privilege of lending it money—and where even fixed income securities with the lowest investment-grade credit ratings yield barely more than 1% per annum—the “hunt
Webinar – Global Fixed Income markets update The ECB surprised markets this morning by announcing an emergency EUR 750 billion lifeline to mitigate the COVID19’s economic repercussions and support the European economy. Though sizeable, investors are left to wonder whether
Update: Yield-Duration Heatmap – 09/03/20 vs. 02/03/20
Monthly Review Sovereign bond yields reached record lows as the outbreak of the coronavirus in Europe initiated a large sell-off globally. 10-year US Treasury yields posted another big monthly decline and outperformed other markets, driven by safe haven demand. German Bund and UK
High-yield market remains supported by favourable capital market environment The market for EUR bonds from non-financial companies with speculative rating has been growing steadily in recent years. The expansive monetary policy of the ECB has strongly contributed to this, causing
Quarterly macro and market insights Our macro outlook for 2020 is modestly constructive. Recent clarity around certain geopolitical risks has been helpful. Specifically, progress in the initial phase of a US-China trade deal and a decisive result in the December
In Credit – 24 FEBRUARY 2020 Macro / government bonds Core bond yields continue to drift lower in a ‘bull flattening’ amid fears about the spread of the COVIC-19 coronavirus outside of China and most recently in Italy and Korea.
Investable bank loans are floating-rate loans made to speculative-grade issuers that theoretically constitute a safer alternative to high yield bonds. Because bank loans pay a floating interest rate, they provide a hedge against rising short- term interest rates. In addition
Cocos in 2020 In our view, growth appears to have reached an inflection point and is showing signs of a stabilisation, central bank policy remains extremely accommodative and recessionary risks are abating. However, we also see a world where corporate
In this issue New year, new decade, we’re off to the races. None of the doom-and-gloom predictions materialized in 2019. Trade tensions did not spiral into out-of-control trade wars, new tariffs did not have a major macroeconomic impact, the US
Leveraged Finance Asset Allocation Insights Spreads on high yield bonds, bank loans, and CLO debt tranches continued to tighten throughout the first few weeks of January amid a backdrop of consistently positive macroeconomic data, a signed Phase One US-China trade agreement,
Give me income….any income. Macro/government bondsConcernsaboutthe spread of a deadly coronavirus from China has amplified market risk aversion in the last couple of weeks. Notably, Asian markets are weaker as is the price of oil. This has provided support for
In Credit
Weekly view from the desk Although some regarded last week’s U.S. non-farm payroll report as disappointing, we regarded it as a solid indicator of what the U.S. economy needs to maintain its trend-like growth. Last year’s monthly payroll average of
The Big Picture 2019 has been a good year with strong returns on a broad range of assets. The global economy has decelerated but we hope policy easing will stabilise things during 2020 (the wing and a prayer). Our favoured
