Fixed Income – Page 16
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Fallen angels: spreading their wings
Corporate bond universes have been historically separated into investment-grade (IG) and high-yield (HY) credit ratings since the rise of the junk bond market during the high-yield boom of the 1980s. This boundary has resulted in persistent dislocations – exacerbated by passive investment based on these indices – including the performance of so-called fallen angels. They are bonds which have recently been downgraded to high-yield ratings.
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Seven questions for investors on the US debt ceiling
What is it? US debt ceiling is a statutory limit imposed on the total debt the government is allowed to have
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Raising the roof
Optimism that a resolution to the US debt ceiling crisis is on the cards helped markets this week. In Turkey, a second-round run-off will decide whether incumbent President Recep Tayyip Erdoğan extends his two decades in power.
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Uncut gems: The evolution of ESG in EM sovereign debt
There are few asset classes upon which ESG factors have a more visible and profound impact on financial outcomes than in emerging market sovereign debt. However, effective ESG integration in the space remains inconsistent.
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Special situations: Distressed debt in testing economic terrain
After a 2022 when primary markets were much more selective than in previous years, and on the backdrop of rising interest rates, a number of companies may find themselves struggling to refinance debt when facing a maturity wall in 2024 and 2025.
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What the Austrian school of economics got wrong
At the dawn or dusk of every recession, the time comes for some to reopen the Austrian economic textbooks (well, grimoire might be more appropriate). And on such occasions, the time to close them arises promptly.
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Is the Consumer Cracking?
News from the consumer sector reveals intriguing trends, as well as the importance of credit and security selection in today’s complex market environment.
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PM Spotlight: A Mathematician Managing Munis
Nick Venditti, Senior Portfolio Manager of Municipal Fixed Income, has an exceptional background in municipal bond risk. Read this issue of PM Spotlight to learn about his approach to the asset class.
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Challenges faced by emerging market corporates
Emerging market (EM) corporations with foreign currency debt found life particularly tough during the decade-plus of dollar strength. Weak currencies put pressure on profits among companies with a domestic focus but with hard currency liabilities. High domestic interest rates make for high costs of funding.
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How strong dollar dynamics impacts emerging markets
Years of strong dollar dynamics have had a far reaching consequences for emerging economies, much of it played out in the currency markets.
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The stars align for emerging market bonds
The stars are aligning for emerging market (EM) debt. And according to our analysis, there are good reasons to believe these assets – both sovereign and corporate bonds - are on the cusp of an upswing that could last for years to come.
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Opportunities across the credit spectrum for multi-sector income investors
As central banks near the end of hiking cycles, the environment is becoming increasingly supportive for fixed income.
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Markets rally despite bank scare: Q1 roundup
Global stocks rose as investors welcomed signs from central bank officials in the U.S. and Europe that interest rates may not rise as much as previously expected. Lower inflation levels, combined with a crisis in the banking sector, prompted central bankers to consider adjusting monetary policy in the months ahead, leaving investors to speculate that there may be no additional rate increases this year.
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Bridging the Gap: Insurers and Fixed Income
Can insurance investors take advantage of higher yields without crystalizing losses or assuming excessive risk ahead of a turn in the credit cycle?
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Financial stability concerns back to the fore
In this macroeconomic update, Silvia Dall’Angelo, Senior Economist, reflects on the scenarios that have influenced markets this quarter, including fragility in the banking sector and the US/China tech ’Cold War’.
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Green vs. Social Bond Premium
While responsible investors consider that the environmental and social pillars are highly interconnected when implementing ESG and climate strategies, our research shows that the green and social bond markets are not integrated.
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Macroeconomics, Geopolitics, and Strategy - May 2023
Will real bond yields come back down?
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Stress in US regional banks continues, while the Fed moves towards a pause
The recent banking stress has been a real test of capital and liquidity regulations enacted after the 2008 crisis.
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Understanding China’s local government debt risk
Recent media reports on China’s debt-ridden Guizhou province pleading for Beijing to bail it out have raised market concerns about billions of dollars in local government debt which has been seen as ‘the canary in the coalmine’. The issue with impoverished Guizhou’s sizeable debt burden is illustrative of problems at China’s local government financing vehicles (LGFVs).
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Infrastructure debt: An essential ingredient
With inflation returning and investors on the hunt for stable yields, insurance companies should explore how an infrastructure debt allocation can support their investment strategy.