This time of year I usually take a break from writing articles and instead send through my best articles from the past year. This year I’ve dug back in the archives to the inception of Narrow Road in 2012. The articles chosen are a mix of credit commentary and pieces... Show More
It's safe to say that credit managers DO NOT want you to read the study we share here. It’s a Christmas cracker to be discussed over the BBQ this summer. In trying to diversify portfolios, are asset allocators actually adding risk using credit? Show More
The announcement of the Australian Business Securitisation Fund (ABSF) this month has been derided as a political stunt by a few observers. However, if managed correctly it could (i) reduce the cost of borrowing for small and medium businesses and (ii) earn the Federal Government a decent return on its... Show More
Credit is smouldering right now. When that smoke becomes fire, the door becomes a key hole and only the first few get through. The rest get burnt. Holding credit risks with your equity holdings into 2019 and 2020 seems mighty dangerous. Don’t get barbequed this season. Show More
Fixed interest is a core part of any good portfolio, but just how well is the asset class understood? In this exclusive Q&A with Livewire, Jay Sivapalan, Co-Head of Australian Fixed Interest and Portfolio Manager at Janus Henderson Investors discusses the biggest theme in the market today, where he's seeing... Show More
US equities plunged quickly on October 10, seemingly in response to several elements but nothing in-particular. US 10-year bonds traded through 3.12% and up to 3.24% on strong payroll data. Fed chief Powell declared rates to be a ‘long way from neutral’ and angst grew around the trade war with... Show More
The ‘reach for yield’ has caused formerly defensive portfolios to gradually venture into higher risk assets that could leave them exposed to downturns. As a consequence, Gopi Karunakaran, Portfolio Manager at Ardea Investment Management urges investors to question just how defensive their portfolios really are. Show More
When a triple-B-rated utility company issues a 3-year bond at a negative yield, perhaps it’s time for the credit cycle to call last orders at the bar? Gopi Karunakaran, Portfolio Manager at Ardea Investment Management flags some late-cycle behaviour, and warns of an imminent structural shift. Show More
Bonds are typically viewed as a defensive component of an investor's portfolio. They tend to perform best when your riskier assets are doing poorly. Stuart Dear, Deputy Head of Fixed Income at Schroders says the analysis they've conducted shows this relationship has held true in all but one circumstance over... Show More
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
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
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
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
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
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
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
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
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
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
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