Tag Archives: high yield bonds
What Fixed Income Index Liquidity Means for Insurers
How are index-based strategies helping insurers measure and address liquidity in their portfolios? Take a closer look at the why index liquidity matters with S&P DJI’s Nick Godec, Morgan Stanley’s Meredith Shaw, and BlackRock’s James Winslow.
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BBB Bond Downgrades Added USD 88 Billion to the High-Yield Bond Market YTD
In recent years, one noticeable development in the corporate bond market has been the rapid growth of the BBB bond market in terms of its absolute amount and relative share of investment-grade corporate bonds. We wrote a blog on this topic in May 2019 detailing the growth of the BBB bond market and its impact…
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Like the Virus, Credit Spreads Could Be at Risk of a Possible Second Wave
Ever since the Fed released its tsunami of credit, credit markets have rallied the most since the depth of the Global Financial Crisis. Continued central bank actions have driven the already existing trend toward demand for higher-yielding assets, helping companies issue debt with fewer lender safeguards and covenants. With the Fed willing to support the…
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Impact of Term Structure on VIX® Futures Correlation with Bond Sectors
Recently my colleague wrote about the correlation between VIX (spot and futures) and two credit sectors (high-yield and emerging market bonds). The blog shows that VIX futures exhibit stronger negative correlation than VIX spot and that this stronger negative correlation of bonds to VIX futures than to VIX spot comes mostly from down markets. In…
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Correlation Analysis of VIX® and High Yield and Emerging Market Bonds
The CBOE Volatility Index® (VIX) measures the implied volatility of the S&P 500® over a 30-day period. It is widely followed by market participants across asset classes to gauge market sentiment. Traditionally, fixed income market participants have incorporated it into macro analysis. Can VIX-related products be used as hedging tools for some bond sectors that…
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Think Rates Will Stay Low? Consider Preferreds Over High Yield Bonds
As income seekers are forced to take additional risk to meet income needs in today’s near zero interest rate environment, preferreds may be considered over high yield bonds for the following five reasons: 1. Significantly higher credit quality 2. Comparable yields and lower volatility 3. Tax advantages on income 4. Call risk appears limited in…
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Three Myths of the U.S. Senior Loan Market
The S&P/LSTA U.S. Leveraged Loan 100 Index has returned 1.76% year to date under performing vs. fixed rate high yield bonds. The low rate environment and continued demand for yield generating asset classes has pushed the S&P U.S. Issued High Yield Corporate Bond Index returns to 4.32% year to date as yields have fallen by…
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