The TwentyFour Blog

Fixed income investors are well versed in the risks of ‘fallen angels’, investment grade companies whose bonds tumble in value once they are downgraded to high yield.

The regulations governing market activity have been constantly evolving, but the ESMA directive implementing the Central Securities Depositories Regulation (CSDR) will potentially have quite an impact on traded credit.

The Bank of England (BoE) on Monday published its latest financial stability report and the results of its 2019 bank stress tests, and declared that the UK financial system is well prepared for even a worst-case Brexit and consequent trade war.

"One group of issuers that appears vulnerable to us as we move into a new decade is those facing increased investor scrutiny due to Environmental, Social and Governance (ESG) factors. The case of CoreCivic, a listed REIT in the US, is a good example"

Overnight markets have had significant news to digest, with two of the major geopolitical hurdles that had been worrying investors being removed.

"Where defaults get to exactly depends on a few things, but we can certainly analyse where we think the problem areas could be, whether cracks are already starting to appear, and what investors might do to protect themselves."

By now investors should be getting used to the ever more frequent hiccups in the trade negotiations between the US and the rest of the world.

"In some parts of the global economy, we might be seeing a bottom in terms of low activity levels." TwentyFour's Felipe Villarroel discusses the factors behind these improving trends.

“NIBC, has been involved in ESG/CSR focused lending in Europe for some time, and is the first manager to issue what we might call an ESG CLO." Elena Rinaldi discusses why in terms of ESG, NIBC would receive a high score from us.

"Younited’s funding strategy is as innovative as its business model... In May this year, the company successfully issued its first #ABS backed by French consumer loans" TwentyFour's Ben Hayward discusses.

"We have been participants in the Additional Tier 1 (AT1) sector since its introduction in 2013, albeit with a high degree of selectivity, but the risk-reward has been obvious to us." Gary Kirk discusses the latest AT1 news from Fitch

At this late point in the cycle, fixed income investors are on high alert for signs of potential excess in the capital markets, and a proposal for potentially the biggest leveraged buyout (LBO) in history would certainly fall into that category.