Investment Grade

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?

Johnathan Owen, Portfolio Management, discusses the notable improvements seen in ESG disclosures over the past 24 months, categorising them into three main aspects; environmental, social and governance. 

Gordon Shannon, Partner and Portfolio Management, highlights climate change as one of the main topics which gathers a tremendous amount of attention within ESG investing, discussing the Paris Agreement, lack of data and poor transparency. 

In our Investment Grade quarterly update, Gordon Shannon, reflects on government bond yields, which accelerated sharply at the end of Q3, as well as commenting on the behaviour of the European Central Banks over the quarter and the soft-landing 'fairytale' markets had hoped for.

Jack Daley, Portfolio Management, tackles a common question: When is the right time to add duration? This is a topic we frequently explore and debate.

Johnathan Owen, Portfolio Management, reflects on why the AT1 market has been brought into the spotlight this year, following the events of the US regional banking crisis and Credit Suisse.

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. 

This paper takes a deep dive into the flourishing ESG sector and examines the trends, challenges, and opportunities that have emerged in recent years, with a particular focus on data quality, the expansion of ESG labelled bonds, action from central banks and whether or not the green premium or ‘greenium’ makes sense for issuers.

Chris Bowie, Partner and Portfolio Management, discusses three key reasons why he believes short-dated investment grade credit is an attractive investment option.

Jack Daley takes a look into the economic events that have influenced the investment grade markets in Q2. He then goes on to explain why he believes investment grade fixed income offers the most attractive risk-adjusted returns currently available.

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.