Institutional Investor (May 25)
“Managers that want to run fixed-income funds with a focus on environmental, social, and governance factors face larger research challenges than those in stocks. But the massive opportunity in bonds may make the uphill battle worth it.” Compared to equities, the “patchwork of standards” increases the “risks of ESG fixed income funds.”
Tags: Bonds, Challenges, Equities, ESG, Fixed income, Funds, Managers, Opportunity, Patchwork, Research, Risks, Standards, Stocks, Uphill
Financial Times (September 22)
“While Evergrande’s US dollar bonds are trading at levels that suggest default, Beijing is unlikely to allow the company’s woes to proliferate to the point at which they risk creating a systemic crisis. The correct way to view the Evergrande meltdown is to see it as a controlled explosion. Beijing is teaching the developer a very public and painful lesson.”
Tags: Beijing, Bonds, Controlled, Default, Evergrande, Explosion, Lesson, Meltdown, Painful, Risk, Systemic crisis, Trading
Investment Week (March 12)
“BBB corporate bonds, the lowest investment grade rating band in which a company’s debt rating can reside, have now grown to make up more than half of the entire global investment grade (IG) market.” When the next downturn strikes,”there could be a cascade of ‘fallen angels’, companies that are downgraded from IG to high yield (HY), swamping the smaller HY market and causing problems for investors as liquidity dries up and imperfect market clearing mechanisms struggle to cope.”
Tags: BBB, Bonds, Debt, Downgrade, Downturn, Fallen angels, High yield, Investment grade, Liquidity, Market clearing, Strikes
Wall Street Journal (October 3)
“Investors propelled bond yields to multiyear highs Wednesday as robust economic data and an easing of trade tensions across North America sparked fresh optimism about the global growth outlook. Wednesday’s bond rout sent the yield on the 10-year U.S. Treasury note, a closely watched barometer of investors’ sentiment toward growth and inflation, to its highest level since July 2011.”
Tags: Bonds, Economic data, Growth, Highs, Inflation, Investors, Optimism, Sentiment, Trade tensions, Treasuries, U.S., Yields
New York Times (August 9)
The $30 trillion U.S. stock market hogs the attention, but “the larger domestic debt market—at around $41 trillion for the bond market alone—reveals more about our nation’s financial health. And right now, the debt market is broadcasting a dangerous message: Investors, desperate for debt instruments that pay high interest, have been overpaying for riskier and riskier obligations…. with little concern that bonds can be every bit as dangerous to own as stocks.” The mispricing of risk is still rampant and when spreads rise and defaults begin, “trillions of dollars in invested capital could be lost.” Although, we’re not necessarily “on the verge of a recession. But the corporate debt bubble inevitably will play a role in causing it.”
Tags: Bonds, Bubble, Dangerous, Debt market, Desperate, Interest, Investors, Mispricing, Overpaying, Recession, Riskier, Stock market, U.S.
Euromoney (March 3)
“At what point does a boom become a bubble? The question needs to be asked in Asian high yield, where year-to-date issuance volumes are fast approaching the figure for the whole of 2016 in China and have already long exceeded it in India and Indonesia – after just eight weeks of the year, one of which was a write-off for Chinese New Year.”
Financial Times (May 20)
“The plunge in yields on corporate and sovereign bonds in Europe and Asia — the value of bonds with a negative yield is nearly $10tn, according to Fitch — has sent investors racing into the US market.” This surging demand “has allowed companies to issue debt at lower yields, though US yields are still more attractive than in other parts of the world.”
Tags: Asia, Bonds, Corporate, Debt, Demand, Europe, Fitch, Investors, Negative yield, Plunge, Sovereign, U.S., Yields
Institutional Investor (May Issue)
“The secret weapon of Abenomics” is the rebalancing of Japan’s Government Pension Investment Fund (GPIF). “The GPIF is diversifying at a pace that’s astonishing for a fund of its size…. In the last six months of 2014, while slashing its JGB holdings, the fund increased its exposure to Japanese stocks by ¥5 trillion, to foreign equities by ¥7 trillion and to foreign bonds by ¥4 trillion.”
Tags: Abenomics, Bonds, Diversifying, Equities, GPIF, Japan, JGBs, Rebalancing, Stocks
The Economist (May 1)
Since 2010, foreign creditors “have extended the equivalent of more than $5 billion of 100-year bonds to Mexico in three currencies: dollars, sterling and now euros.” Moreover, Mexico has received exceedingly good terms (4.2%-6.1%) given its “distinctly spotty credit record.” This speaks volumes about the intensity of the global search for yield, but raises the inevitable question “what are the chances of investors, or their grandchildren, getting their money back?”
Financial Times (January 23)
“It has taken far too long for the European Central Bank to embark on quantitative easing but its belated action is no less welcome.” ECB president Mario Draghi unveiled a massive program to purchase eurozone bonds through 2016 to help counter the threat of deflation. “There is no doubt that Mr Draghi needed to act. Growth and underlying inflation have been relentlessly weak, providing clear evidence that demand in the eurozone is faltering.”
Tags: Bonds, Deflation, ECB, eurozone, Growth, Inflation, Mario Draghi, Quantitative easing
