Sharing our convictions

The clear opportunity within IG credit from our perspective, without having to take excessive risk, is to buy legacy Bank and Insurance IG debt.

With BP slashing its dividend this week, we have now seen 52 of the FTSE 100 companies suspend or cut their dividends this year. 

As expected the Monetary Policy Committee (MPC) kept UK base rates at 0.1% and maintained their current level STG IG corporate bond on the BoE balance sheet at £745bn, with no immediate expectations of a need for further stimulus.

Investors’ risk appetite changed over the course of July with our risk indicator in green territory for the first time since June 2019. We continue to overweight equities, but to a lesser extent. Gold still shines.

This week we are right in the middle of the European banks’ Q2 reporting period. Today for example we had results from a diverse group of Europe-listed banks, with Credit Suisse, BBVA, Lloyds and Standard Chartered all reporting. All have very different business models and footprints across varying geographies.

Coventry Building Society today priced a well-received £350m 2.5 year UK RMBS deal, and by using a Master Trust style structure (historically the preserve of only the largest UK banks) the issuer has beaten its own path to joining the big leagues of RMBS.

Precious and industrial metals are on a winning streak. Gold could reach 2200 US dollars by the end of this year and the silver rally is far from running out of steam. There are four reasons for this.

“You lose some, you win some”, a number of investors may think after the turbulent down and up on the markets. But what is set to happen now, after the recovery?

As more government bond curves around the world join the select group trading at negative yields, we are seeing a spike in ‘Japanification’ headlines in the press.

Earlier this week, Moody’s published its default study for June, which showed that as expected, default rates globally have started to pick up as a result of COVID-19. The trailing 12-month global high yield default rate reached 5.4% at the end of June, up from 4.8% in May, as the gap to the long term average of 4.1% continues to grow.

Senior Portfolio Manager Christian Hantel and Credit Research Analyst Diana Chiu reveal how taking part in new issues, in-depth credit analysis, and relative-value trades can boost performance in a global corporate bond portfolio.

As we enter Q2 earnings season, we will be most interested to learn how Corporate America has fared over the past three months.