Investment Grade

There is little disagreement among investors and economists that the last few years have been highly unusual in many respects. An inflationary shock in developed markets, one of the fastest rate hiking cycles on record, the worst year in decades for government bonds (2022), and mild recessions with no movement in unemployment are just a few of the dynamics that have strayed from recent norms.

In this Back to Basics webinar, Gordon Shannon (Partner, Co-Head of Investment Grade) and Johnathan Owen (Portfolio Management) from our Investment grade team provided a comprehensive understanding of the key aspects of corporate hybrids.

TwentyFour Asset Management’s Chris Bowie, takes a closer look at how he is thinking about duration within fixed income portfolios and shows how following conventional wisdom on duration might prove costly for some investors this year.

The term ‘fossil fuel financing’ refers to the provision of capital (including loans, investments, and other forms of capital) to companies involved in the exploration, extraction and production of coal, oil and natural gas.

After a horrible year for financial markets in 2022, the macro-outlook for 2023 had a lot of consensus views, with most predicting a much better year ahead, helped by supportive rate cuts from central banks and positive returns from both government bonds and credit.  

While bonds are once again finding their feet, investors have found themselves sitting on cash balances of 30% to 50%. This capital preservation trade has made perfect sense, but does it still make sense as we reach terminal rates?

It is our view that without a doubt 2022 was a year to forget for the bond market. Whether you held government bonds, high end corporate credit or riskier high yield paper, you would have taken a knock as steep increases in interest rates across the globe sent bond prices tumbling. 

As mid-year investment bank reviews hit our screens, we are seeing a shared expectation of spread decompression between IG and HY bonds, signalling rising defaults. Pierre Beniguel argues that tightening HY spreads and resilient performance suggest surprising sector support due to lower issuance and available cash.

In recent weeks the US debt ceiling has been dominating headlines with investors focused on the imminent threat of a US default which would be extremely unnerving for global markets. We look at the wider implications facing the US economy.

Following higher than expected inflation data in the UK, Gordon Shannon looks at the knock on effects within the Gilt market and the increased pressure on the Bank of England.

Despite the recent volatility in the banking sector, corporate credit has remained strong. Pierre Beniguel looks at the interesting rating action which caught attention last week.

2022 was the worst year for bonds in living memory. So, could 2023 be similarly bad for other asset classes? Chris Bowie looks at the case for short dated investment grade credit for 2023.