Displaying items by tag: credit

Wednesday, 15 December 2021 20:28

Active Fixed Income ETFs Get Booming Inflows

Saying the bond market is difficult would be more than an understatement, and while yields are creeping it's still hard to get the historic performance. However, many investors are turning to active fixed income ETFs. This has led to a swelling of inflows into the market category making up 16% of ETF inflows in 2021 through October. Turmoil at the Fed and the continual threat of a taper tantrum have many investors looking to pros to sort out the difficulties in the bond market. Active FI ETFs can also fit narrower targets and accommodate the rapidly shifting macroeconomic environment.


FINSUM: Seasoned veterans at the helm make the most sense when the environment is shifting, and active ETF can edge out when the future is uncertain.

Published in Bonds: IG
Wednesday, 01 December 2021 09:14

Bond compass: barbelling credit and defensives

Fixed income markets are currently weighing several potential peaks — peak growth, peak inflation (maybe) and peak policy support (likely)...See More

Published in Bonds: IG
Tuesday, 02 November 2021 19:12

Investment Grade Bonds are Going Wild

JPMorgan Chase & Co. is the latest financial firm to sell debt in the U.S. Bond Market, joining the likes of Goldman Sachs, Bank of America and Citigroup Inc.. JPMorgan is selling over $3 billion in bonds with a yield of .97 percentage points over the U.S. Treasuries and 11 year maturity. The flood in financial bonds is a result of the strong earnings posted by the financial industry in the last quarter. Goldman leads the pack with over $9 Billion in new debt issuance. However, some say JPMorgan is the most susceptible to issuance pressure from regulators with debt issuance driving leverage.


FINSUM: Don’t let balance sheet risk get anyone worried, because post 2008 leverage ratios are closely monitored and almost ensure fiscal support pending financial risk.

Published in Bonds: IG
Tuesday, 28 September 2021 20:31

How Social Movements are Growing Credit

There has been extensive coverage as to the number of new loans issued being tied to ESG factors, namely greenhouse gas emissions and environmental sustainability, but there is a new dimension as to which companies are securing funding—gender equity. Many companies are signing loans that are tied to increasing women’s share of a company’s workforce from entry-level jobs all the way to executive and board positions. BloombergNEF estimates that these loans make up $19 billion of the market this year, already more than quadrupling 2020’s numbers. Companies improving diversity have better retention, collaboration, decision-making, and a broader talent pool according Tania Smith, leader of a bank authorizing these new loans. If companies fail to meet the diversity criteria they can face interest rate penalties much like the ESG market. Gender equity and diversity loans are a fraction of the total ESG market of $231 billion, yet they are a quick growing segment that will aim to improve gender equity in the corporate world.


FINSUM: This gives companies a new avenue to secure credit at a discount, much like ESG. If companies meet this criterion they can have an edge over competitors in terms of rates and access.

Published in Eq: Tech
Wednesday, 15 September 2021 19:33

A Big Warning Sign is Flashing in Bonds

(New York)

The bond market seems to have lost all touch with reality. Yields are extremely low, and given the more relaxed inflation reading this month, seem likely to stay pinned. Now consider this: European corporate debt real yields just turned negative. Yes, you are paying for the privilege of holding corporate debt. The ICE BofA index of European high-yield bonds is now at 2.34%, well below inflation.


FINSUM: Is there were ever a sign of a peak, this is it. Bond yields have nowhere to go but up, as there is no defensible logic that they could sustainably move lower. Unfortunately, it seems as though bonds and equity could move hand in hand, as the catalyst for big losses would be the Fed, which would trigger both asset classes.

Published in Bonds: IG
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