18 Apr 2019 Market Update Strategic Income - Quarterly update - April 2019 Felipe Villarroel discusses the Strategic Income strategy performance for Q1 and looks forward to the rest of the year. Watch now
16 Apr 2019 TwentyFour Blog Sonia and RMBS Get Hitched They have been dating for some time, and been the topic of discussion at numerous dinner parties, even its good friend Covered Bond got hitched, but now RMBS has taken the plunge and tied the knot with Sonia (the Sterling Overnight Index Average), having finally ditched long-term previous partner, Libor. Read more
15 Apr 2019 TwentyFour Blog Diligence Due in AT1 as Spreads Tighten Since the start of the year credit markets have been very well supported, reversing much of the sharp period of spread widening we experienced in the final quarter of 2018. Read more
9 Apr 2019 TwentyFour Blog Have European Regulators Just Tightened Financial Conditions? The ECB published the result of its Supervisory Review and Evaluation Process (SREP) yesterday, which increased the average capital requirements for European banks, and overall, increased the average SREP requirement by approx. 100bps. Read more
2 Apr 2019 TwentyFour Blog Olive Oil, What’s Not To Like? Deoleo is a Spanish olive oil company that people will know from its brands like Bertolli. It’s long been considered to be one of the “idiosyncratic” stories in the European leverage loan market. The deal has an 85m revolver, a 55m second lien tranche and widely traded 460m senior secured tranche. Read more
26 Mar 2019 TwentyFour Blog A Novel Development by Coventry One of the challenges that banks face when considering the re-financing of AT1 capital is market timing. Treasurers have to answer the question whether to issue when market conditions are supportive, which may result in a considerable period when they have two overlapping securities (adding to their interest overhead); or wait to refinance just before the call date, which of course increases the risk of having to issue in a market demanding more punitive terms. Read more
21 Mar 2019 TwentyFour Blog Rush of AT1 Supply The period following the full year results releases from the banks is typically followed by large volumes of subordinated bond supply from the banks. This year is no exception as the pace of new issues is ramping up, in particular in the higher beta Additional Tier 1 (AT1) securities; colloquially known as Coco bonds. Already this week there have been new benchmark issues from BBVA, Barclays and BNP, taking 2019 issuance to date in this sector to a total of €14 bn. Read more
20 Mar 2019 TwentyFour Blog Japan Leading The Way In CLOs, 2019 Observations he first quarter of 2019 is coming to an end and after a bumpy end to 2018 we did not expect to see a lot of issuance of new CLOs once the pipeline had cleared. But although CLO debt remains expensive for equity investors (arbitrage has only gotten worse as the leverage loan supply is still slow) there seems to be no end to new deals coming to the market. There are a few things that for us as debt investors stood out; the strong Japanese bid for AAAs, structural differences, varied pricing and spreads that have not recovered as quickly as for similarly rated corporate bonds. Read more
19 Mar 2019 TwentyFour Blog Pass the Baton Mario The big monetary policy event over the month was the increase of monetary stimulus announced by the ECB after two years of slowly weaning the Eurozone off extremely easy money. At the ECB meeting of Thursday the 7th of March Mario Draghi announced the introduction of new TLTRO (the last round ended in December 2018, so this is TLTRO III) and interest rates guidance was modified for the current levels to remain to the end of 2019 (previously mid 2019). Market consensus is for an even longer pause. Read more
18 Mar 2019 TwentyFour Blog Credit Ratings Migration Favours Europe over US One of the elements we look at on our dashboard that guides us on the state of the economic cycle is credit rating migration. We look at spread movements too, but rating change gives us another line into the risk that rated entities are taking or are confronted with. While we recognise that rating change is a backward looking indicator, viewed in conjunction with other measures, it is possible to draw some important conclusions. Read more
12 Mar 2019 TwentyFour Blog Technical Factors Drive Weakness in US High Yield Investors decided fairly early this year that, with the help of a dovish Federal Reserve, the big negative move of Q4 2018 was not signalling the beginning of the end, and was instead a dip to be taken advantage of. The rally since has barely paused for breath, with a sustained and broad-based recovery taking hold. Read more
8 Mar 2019 TwentyFour Blog A Good Price Point For European ABS We wrote a blog a month ago, “January: the Month of ABS-tinence”, about the level of new issuance in the European ABS market, and the slightly counter-intuitive impact it was having. Read more