Operating at the Intersection of Technology and the Capital Markets
Tag: High Yield
Seems obvious, but now would be a good time for those that are flush with cash to step into the breach as commercial banks tighten. Traditional Asset Managers, Private Equity firms, Venture Capital firms and cash-rich Corporates are all in a position to lend to the mid-market as banks pull back. Credit spreads are widening … Continue reading Good Time To Be A Non-Bank Lender
High Yield defaults are expect to increase as one would expect. The great unknown is how many fallen angel securities (investment grade securities that are downgraded to high yield status), will there be? This is an open question as for the past number of years billions of Dollars of low quality debt has been packaged … Continue reading High Yield Defaults To Climb
The ICE BofA High Yield Index stood at 9.5% at week's end (measured daily), whereas CPI (a monthly measure) stood at 8.2% as of September. Therefore, investors enjoy 130 basis points (the delta between the High Yield Index and the CPI) of positive real yield. The fact that positive real yield exists in the High … Continue reading High Yield Bonds Offer A Positive Real Yield
The Fed will continue to hike interest rates for the foreseeable future. Macroeconomic and geopolitical risks are increasing. Therefore, yields can only move in one direction (Up), but this story won't have a happy ending like the Pixar movie of the same name. That is good news for high yield investors, good news for savers … Continue reading Yields Will March Higher
Prepare for equity dilution and layoffs as companies roll over cheap maturing debt at higher rates. Companies have been living off of ultra-low interest rates since 2008. Many companies got addicted to 14 years of ultra-low rates and abused the reality by taking on enormous sums of debt, primarily to buy back stock in order … Continue reading Rolling Over Corporate Debt At Higher Rates
The Bank of England stepped into the bond market, agreeing to purchase Government long bonds until October 14th. The BoE plans to restart its Government bond sale program on October 31st (the central bank plans to sell GBP 80 billion of bonds each year as part of its tightening process). How did the U.K. find … Continue reading The U.K., The U.S., Inflation & Real Yields
Could the NASDAQ re-test the COVID lows of March 2020 when it sat around 6,900? Yes. That would require a prolonged recession (which we expect) AND The Fed not restarting its ultra-dovish monetary policy of Quantitative Easing combined with a near zero Fed Funds Rate. Who knows how the Fed will behave in 2H 2023 … Continue reading The NASDAQ Could Re-Test COVID Lows & The Rise of High Yield
Global High Yield bond issuance from January 1st through May 23rd is at a 13-year low as investors have less appetite for risk in the absence of the Fed put. Global High Yield bond issuance totalled $90 billion between January 1st and May 23 of this year. This is the lowest issuance level during that … Continue reading High Yield Bond Issuance At 13 Year Low
It is tough to be a fixed income investor in this market. Yields are rising, but in real terms even high yield securities are in negative territory given the inflated CPI environment. Some fixed income portfolio managers are spinning that now is a great time to be a fixed income investor because high yield securities … Continue reading Tough To Be A Fixed Income Investor
Insurance company CIOs continue to use Alternative Assets to increase yield in this ultra-low interest rate environment. KKR Asset Management's Insurance CIO survey found similar results (chart below) to our recent TEK2day Spotlight report on the insurance industry which may be accessed HERE. We expect that the heavy use of Alternative Assets in the pursuit … Continue reading Leveraging Alternative Assets To Increase Yield
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