credit

How a “Bear” Outperforms in a Rising Market

Jonathan Rochford

The feedback I often get from readers of my articles is that I must be an investment bear. That’s understandable given my last two articles were “The Dirty Dozen Sectors of Global Debt” and “The Coming High Yield Downturn will be Big, Long and Ugly”. However, the performance of Narrow... Show More

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Why high yield bonds is one asset class to consider for the next correction

Livewire Exclusive

High yield bonds can offer a similar return profile to equities, but with 40% less risk. In this short video, Vivek Bommi, Senior Portfolio Manager at Neuberger Berman explains how, and recalls the performance of this asset class through three major market corrections of the last 20 years. Show More

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Media Worth Consuming - June 2018

Jonathan Rochford

US CLO issuance is at record pace but credit quality is slipping. US high yield bond covenants are at their worst since records began in 2011, even B and CCC rated bond covenants are weak, but in Europe high yield bond buyers are starting to push back on terms. US... Show More

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The Dirty Dozen Sectors of Global Debt

Jonathan Rochford

When considering where the global credit cycle is at, it’s often easy to form a view based on a handful of recent articles, statistics and anecdotes. The most memorable of these tend to be either very positive or negative otherwise they wouldn’t be published or would be quickly forgotten. A... Show More

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Credit Availability IS Australia’s House Prices

Steve Johnson

I have a friend who is mildly wealthy but not gainfully employed. He has been a customer of the same bank for the past 40 years. Like me, he doesn’t own a house. Unlike me, he has been thinking about it. Show More

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A warning siren from the credit market

Livewire Exclusive

The credit market sounded the warning siren well ahead of the GFC: credit spreads blew out in July 2007, before equity markets peaked in November 2007. In this short interview, Charlie Jamieson at JCB warns that while it is early on in the process, credit markets have recently started widening... Show More

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Credit Snapshots – April 2018

Jonathan Rochford

You know it’s late in the credit cycle when credit investors give away their key protections in return for just a little more yield. This acquiesce comes in different forms, including higher levels of leverage, longer dated debt, subordinated debt and weakened or eliminated covenants commonly referred to as “covenant... Show More

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Buy Fear and Sell Greed

Christopher Joye

In my AFR column I argue that Donald Trump's "tape bombs" are the tail wagging the global financial market dog right now, and this volatility begets opportunity (click on that link to read for free or AFR subs can click here for direct access). Excerpt enclosed: Show More

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Credit Snapshots from March 2018

Jonathan Rochford

The increasing gap between US dollar Libor and overnight index swaps (OIS) this year is garnering much attention as it was one of the earliest signs of problems in 2007. Libor is a compilation of the interest rates that major global banks charge when lending to their peers. The OIS... Show More

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Protecting investors through ‘skin in the game’

Steven Fleming

Despite the complex name, securitization is a simple concept. Securitization is taking an illiquid pool of assets and converting them to liquid securities. Securitization got a bad rap in the wake of the GFC, but in Australia, there are important differences to the “sub-prime” market in the USA. This video... Show More

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Higher funding costs to be a huge problem for lower quality assets in a highly leveraged world

Charlie Jamieson

The volatility genie has now been released and is unlikely to go back in the bottle as late cycle fiscal expansion in the US combined with higher global funding rates from the US Federal Reserve will have markets on their toes going forward. Show More

A dangerous consensus

Livewire Exclusive

At the height of the financial crisis, credit markets seized up and liquidity disappeared. In the aftermath of Lehman’s bankruptcy, this caused huge headaches for investors, institutions, and regulators. It may surprise you to learn then, that turnover in these markets is lower today than it was at the nadir... Show More

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Credit Snapshots from February 2018

Jonathan Rochford

With the increase in the American overnight rate and long term bond yields questions are starting to be asked about whether the federal government debt load is sustainable. As interest rates increase, so does the interest bill. Neither major political party seems to care, they have taken turns at making... Show More

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Can Australian homeowners handle higher rates?

Livewire Exclusive

The average variable home loan rate in Australia has fallen from 8.3% to 5.1% in the past ten years, enabling households to borrow more and drive house prices higher. Despite higher levels of household debt, Australians’ level of mortgage stress is quite low. But what if interest rates go up?... Show More

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Outlook 2018: Australian credit remains attractive

Nick Bishop

We expect 2018 to be a stable year for Australian fixed income, with the performance of the domestic economy constraining the RBA’s ability to increase interest rates in the near-term. This is predominantly the result of weak wage growth and inflation running below the RBA’s target. The former is due... Show More

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Livewire Summer School: November rain, and insurance claims

Livewire Exclusive

Guns N’ Roses released their first debut album titled “Appetite for Destruction” in July 1987. Three months later one of the most violent and unexpected equity market corrections in US history occurred. The Dow lost 22.6% of its value on Black Monday, and the causes behind the dramatic fall are... Show More

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High Returns, Low Volatility – What Could Possibly Go Wrong?

Jonathan Rochford

Economic news was strong in October, led by US Q3 GDP coming at an annualised rate of 3.0%. Quarterly earnings and sales for S&P 500 companies are beating estimates by more than usual. One standout was bellwether stock Caterpillar, which after four years of declining revenue has seen sales up... Show More

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Would You Lend to Tajikistan?

Jonathan Rochford

The issue of bonds by Tajikistan this month follows on from recent low quality bond issues from Argentina, Greece and Iraq. Emerging market debt investors piled into the offering allowing the nation to issue US$500 million of ten year bonds at 7.125%. Investors who bought in cited the yield on... Show More

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Emerging Market Debt: Dumb, Dumber and Dumbest

Jonathan Rochford

One of the classic signs that the credit cycle is nearing the end is that borrowers that shouldn’t be getting financed not only get funded, but get it at terms that seem crazy. I’ve recently written about the silly things happening in global high yield debt, Chinese debt and the... Show More

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Spectrum Insights - The capital adequacy fallacy

Damien Wood

The recent collapse of a Spanish bank, two Italian banks, and a missed payment on tier one notes from a German bank reinforced some core beliefs for investing in bank capital. These are:- Show More