Category Archives: AIWM India

Bridging the Volatility Gap between IG and HY

The goal of the S&P U.S. High Yield Low Volatility Corporate Bond Index is to construct a high-yield bond portfolio with low credit risk and low return volatility by applying a low volatility factor.  Does the index methodology truly deliver the effect of reducing volatility?  The back-tested results of the 17-year period ending Feb. 28, 2017, show that the S&P U.S. High Yield Low Volatility Corporate Bond Index may offer an intersection that bridges the volatility gap between the high-yield and investment-grade bond sectors, with increased return efficiency. Read more

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Who’s Afraid of the Fed? Not Investors in Junk Bond ETFs

Inflows into junk-bond exchange-traded funds surged last month, outpacing investment-grade for the first time in 2016. The flip occurred as the Federal Reserve voted to raise interest rates, threatening the value of the underlying debt. Investors’ sudden fondness for high-yield securities likely stems from the market’s increased tolerance for risk since the election of Donald Trump, said Eric Balchunas, an ETF analyst for Bloomberg Intelligence. “There’s a new variable in town and it’s massive.”

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Not So Low: A Review of Paul Blustein’s Book on the IMF and the Euro Area Crisis

The International Monetary Fund’s involvement in the euro area crisis has raised a lot of controversy. According to a widespread conventional view, the “Troika” of creditor institutions—the International Monetary Fund (IMF), the European Commission, and the European Central Bank (ECB)—demanded excessive fiscal austerity of Greece and other errant countries in return for their assistance, and this stance not only failed to restore Greek public credit but also prolonged economic weakness in other countries, including Portugal and Italy. Instead of calling for austerity, according to this view, the IMF should have forced a reduction of Greece’s debt (in other words, engineered an orderly default) from the start of its involvement in the spring of 2010. The IMF is also blamed for ignominiously forcing Ireland to bail out senior bondholders of its failed banks in November 2010 under orders from a dogmatic ECB, itself captured by European financiers.

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CalPERS gives its managers ESG ultimatum

In what promises to be a transformational moment for ESG integration and investment manager accountability, CalPERS will require all of its managers to identify and articulate ESG in their investment processes.

CalPERS staff led by Anne Simpson, senior portfolio manager and director of global governance, presented the ESG manager expectations, and draft sustainable investment guidelines, to the investment committee this week.

 

Read more http://www.top1000funds.com/news/2015/05/22/calpers-gives-its-managers-esg-ultimatum/

Did you know : CCRA curriculum covers ESG principles from Equator Principle Association : http://www.equator-principles.com/

 

Webinar : Factor investing putting academic evidence into practice: How to implement it in your portfolio? May 26, 11am CET

Factor investing putting academic evidence into practice: How to implement it in your portfolio?

When:  Tuesday, 26 May 11:00 CET
Presented by:  –  Joop Huij, head of factor investing research
Presenter:  Maaike Veen

Register now >>
Factor investing putting academic evidence into practice: How to implement it in your portfolio?

More and more investors are realising the advantages of factor investing and starting to implement its lessons not just as an afterthought, but as a top-down element of the overall investment strategy. A large percentage of pension funds still have a cover ratio that barely exceeds the minimum requirement and face funding issues due to the ageing demographics. To meet liabilities, pension funds are looking for higher returns while at the same time have less appetite for risk. Is factor investing the solution for the seemingly opposing challenges of risk and return?

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Joop Huij, PhD, executive director, head of factor investing research
Mr. Huij, head of factor investing research, is responsible for the coordination of factor investing research and development of customised factor investing solutions. He specialises in empirical asset pricing and investment strategies. Mr. Huij also holds a part-time position as associate professor (with tenure) of finance at Rotterdam School of Management. He has published in, among others, the Journal of Banking and Finance, Journal of Empirical Finance, Journal of Financial Markets, and Financial Analyst Journal. Mr. Huij started his career as a researcher in 2007. He holds a PhD in finance from Rotterdam School of Management and a master’s degree in informatics & economics (cum laude) from Erasmus University Rotterdam.

Webinar : The Global Private Finance Opportunity: Searching the globe for the best relative value in private credit, Wednesday, 22 April 630pm IST

As investors continue to hunt for yield in this historically low interest rate environment, global private credit markets offer a potential solution for achieving both attractive returns and diversification. Attend on  Apr 22 2015 6:30 pm IST

Why Listen:

  • Learn about investing globally in private credit
  • Insights into private credit fundamentals worldwide
  • Learn how private credit is originated
  • Key thoughts and considerations around portfolio construction and diversification in North America, Europe, Australia/New Zealand and developed Asia
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Eric Lloyd, head of global private finance
Eric Lloyd is Babson’s head of global private finance. His responsibilities include managing all aspects of the firm’s global private finance enterprise and participating on multiple investment committees. Eric has 25 years of industry experience that has encompassed investment banking, leveraged finance and risk management. Prior to joining the firm in 2013, Eric served as head of market and institutional risk for Wells Fargo and was a member of the board of directors of Wells Fargo Securities. Before the acquisition of Wachovia, Eric worked in Wachovia’s global markets investment banking (GMIB) division and served on the division’s operating committee where he oversaw capital deployment and allocation across Wachovia’s GMIB business. Prior to the operating committee, Eric was head of Wachovia’s leveraged finance group where he was responsible for the origination, structure, due diligence, execution, and distribution and trading of Wachovia’s core leveraged credit products, including syndicated bank loans, bridge loans and high yield debt. Eric holds a BSc in finance from the University of Virginia, McIntire School of Commerce.
Terry Harris, head of portfolio management, global private finance
Terry Harris is a member of Babson’s global private finance group and the group’s investment committees. He is responsible for supervising investment and portfolio management. Terry has 24 years of experience that has encompassed investing senior and mezzanine debt and equity in middle market companies operating in commercial and industrial as well as specialised industries. Prior to joining the firm in 2013, Terry was a partner of Tower Three Partners, and he served as chief investment officer of Firstlight Financial Corporation. Before Firstlight, he was chief risk officer for GE Capital’s global telecom, media & technology finance group. He also held senior credit positions at Bank of America Commercial Finance and Transamerica Commercial Finance. Terry holds a BSc and an MBA from Florida State University, and is a Certified Public Accountant (inactive).

Register now for the webcast >>
About Babson Capital Management
Babson Capital Management LLC (Babson) is a leading global asset management firm with over $212bn in assets under management as of 31 December 2014. Through proprietary research, analysis and a focus on investment fundamentals, the firm and its global affiliates develop products and strategies that leverage its broad expertise in global fixed income, structured products, middle market finance, commercial real estate, alternatives and equities. A member of the MassMutual Financial Group, Babson maintains a strong global footprint, with operations on four continents and clients in over 20 countries. Learn more atwww.babsoncapital.com.

What Drives Bank Funding Spreads?

 

What Drives Bank Funding Spreads?  Thomas B. King and Kurt F. Lewis

We use matched, bank-level panel data on Libor submissions and credit default swaps to decompose bank-funding spreads at several maturities into components reflecting counterparty credit risk and funding-market liquidity. To account for the possibility that banks may strategically misreport their funding rates in the Libor survey, we nest our decomposition within a model of the costs and benefits of lying. We find that Libor spreads typically consist mostly of a liquidity premium and that this premium declined at short maturities following Federal Reserve interventions in bank funding markets. At longer maturities, credit risk explains much of the time variation in Libor, reflecting in part fluctuations in the degree to which default risk is priced in the interbank market. Our results are consistent with banks both under- and over-reporting their funding costs during the crisis but suggest that the incidence of this behavior may have subsequently declined.  Read more

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Revisiting The Asian Financial Crisis

I’ve received dozens of inquiries about the Asian Financial Crisis and its relevance to current market volatility, especially given recent Russian developments.  As a result of this interest, John Wiley & Sons has graciously released an electronic copy of my chapter about the 1997-1998 crisis.  Click the link below to download the PDF:

“The Asian Financial Crisis: The Mirage of a Miracle”

 

Howard Marks – Memo on Lessons on oil

Read the full memo here

HOWARD MARKS – Co-Chairman, Oak Tree
Since the formation of Oaktree in 1995, Mr. Marks has been responsible for ensuring the firm’s adherence to its core investment philosophy; communicating closely with clients concerning products and strategies; and contributing his experience to big-picture decisions relating to investments and corporate direction. From 1985 until 1995, Mr. Marks led the groups at The TCW Group, Inc. that were responsible for investments in distressed debt, high yield bonds, and convertible securities. He was also Chief Investment Officer for Domestic Fixed Income at TCW. Previously, Mr. Marks was with Citicorp Investment Management for 16 years, where from 1978 to 1985 he was Vice President and senior portfolio manager in charge of convertible and high yield securities. Between 1969 and 1978, he was an equity research analyst and, subsequently, Citicorp’s Director of Research. Mr. Marks holds a B.S.Ec. degree cum laude from the Wharton School of the University of Pennsylvania with a major in finance and an M.B.A. in accounting and marketing from the Booth School of Business of the University of Chicago, where he received the George Hay Brown Prize.

Credit Supply and the Housing Boom

The housing boom that preceded the Great Recession was due to an increase in credit supply driven by looser lending constraints in the mortgage market. This view on the fundamental drivers of the boom is consistent with four empirical observations: the unprecedented rise in home prices and household debt, the stability of debt relative to house values, and the fall in mortgage rates. These facts are difficult to reconcile with the popular view that attributes the housing boom to looser borrowing constraints associated with lower collateral requirements. In fact, a slackening of collateral constraints at the peak of the lending cycle triggers a fall in home prices in our framework, providing a novel perspective on the possible origins of the bust.  Read more

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Lessons Learned From 20 Years Of Rating Global Project Finance Debt – S&P

It has often been said that those who fail to learn from history are doomed to repeat it. The global project finance sector can perhaps be included among those who have learned from experience. The sector learned some hard lessons in its pioneering days, such as how to counter market exposure risk–the biggest cause of default–and how to strengthen a project’s structure to provide the necessary… More

 

Growing NPAs in Banks: Efficacy of Ratings, Accountability & Transparency of Credit Rating Agencies

Download the presentation by Mr. Jagannadham Thunuguntla
Head of Research, SMC Global Securities Ltd

Growing NPAs in Banks: Efficacy of Ratings, Accountability & Transparency of Credit Rating Agencies

The Effects Of Big Data On Economic And Credit Research – S&P

Tune in to any business channel on TV or flip open any financial journal, and it probably won’t be long before you hear or find a reference to “big data.” What you won’t find as often is a definition of the term or what it truly means in any context. So what exactly is big data, and why is it such a big deal? More

 

2015 U.S. Corporate Credit Outlook: Generally Stable, But Risks Are Rising

2015 U.S. Corporate Credit Outlook: Generally Stable, But Risks Are Rising

Our credit outlook for U.S. corporate ratings in 2015 is generally stable. We expect continued U.S. economic improvement to counteract slower growth overseas. We also see U.S. corporate revenue continuing to grow in the mid-single digits in 2015, in line with aggregate nominal economic growth prospects. Although the sharp decline in oil prices will weigh on energy sector conditions, it will immediately benefit airlines, trucking, and auto manufacturers, while lowering energy costs for many other segments of the economy. It could also boost consumer spending in 2015 and 2016, but stronger income gains are likely needed for more robust long-term growth. We forecast that corporate refinancings will remain manageable in 2015 because protracted low interest rates and credit-friendly borrowing conditions have allowed many companies to push out maturities. However, U.S. interest rates are reaching an inflection point, and we expect the Federal Reserve to make its first policy interest rate increase in second-quarter 2015.

Attend our Live Facebook Q&A Event – Careers in Credit and Banking, on 30th Jan 2015, 4pm IST at https://www.facebook.com/events/1404859183144414/

Economic Conditions Snapshot, December 2014: McKinsey Global Survey results

Geopolitical instability persists as a top risk to global growth, as it has been all year—and especially in North America. Yet few executives say it will affect their companies’ plans for 2015.

December 2014

Geopolitical concerns remain paramount as a risk to growth for executives, whose optimism for the global economy in early 2014 has faded over the course of the year. This is particularly true in North America, where respondents to McKinsey’s newest survey on economic conditions are most glum about the world economy’s prospects—even as they report consistent improvements at home.1 Despite these concerns, few executives say geopolitical issues will meaningfully affect their companies’ strategic and financial-planning decisions for 2015. But heading into a new year, respondents anticipate other problems on the horizon: volatile exchange rates and oil prices (more acute concerns among emerging-economy executives) and cybersecurity attacks, which respondents in North America are the likeliest to expect as a potential economic shock in the next 12 months. Read more

Attend our Live Facebook Q&A Event – Careers in Credit and Banking, on 30th Jan 2015, 4pm IST at https://www.facebook.com/events/1404859183144414/

Webinar : CLIMATE CHANGE AND THE FOSSIL FUEL DEBATE. IS IT JUST HOT AIR OR A REAL THREAT TO ASSET OWNERS? Friday, 30 January 2015 1:30 pm HKT

CLIMATE CHANGE AND THE FOSSIL FUEL DEBATE. IS IT JUST HOT AIR OR A REAL THREAT TO ASSET OWNERS?Friday, 30 January 2015
1:30 pm Singapore/Hong Kong time, 4:30 pm Melbourne/Sydney time

What is the fossil fuel debate?
What are the current challenges in the market?
Is this a threat to asset owners?

o What risks is your portfolio facing?
o What strategies should asset owners be adopting or considering in dealing with this very stormy topic?
o Can you afford to just do nothing?
o Does divestment make sense?
Climate change and the fossil fuel debate. Is it just hot air or a real threat to asset owners?
Date:
Friday, 30 January 2015
Time:
1:30 pm Singapore/Hong Kong time (GMT+8)
4:30 pm Melbourne/Sydney time (GMT+11)
Speakers:
Mamadou-Abou Sarr, Global Head of ESG, Northern Trust Asset Management
Paula DiPerna, Special Advisor, CDP North America
Jessica Robinson, CEO, ASRIA
Host:
Leigh Powell, Editor, AsianInvestor
Register :
 http://edge.media-server.com/m/p/vfx4bwwe

Asset Management at Northern Trust comprises Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc. and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.

About Northern Trust:
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of asset servicing, fund administration, asset management, fiduciary, and banking solutions for corporations, institutions, families, and individuals worldwide. Chicago-based Northern Trust has offices in 19 states, Washington, D.C., and 20 international locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of September 30, 2014, Northern Trust had assets under custody of US$5.9 trillion, and assets under investment management of US$923.3 billion. For 125 years, Northern Trust has earned distinction as an industry leader in combining exceptional service and expertise with innovative products and technology. For more information, visit www.northerntrust.com and follow us on Twitter @NorthernTrust.

Host:
Leigh Powell
Editor, AsianInvestor
Speakers: Mamadou-Abou Sarr
Global Head of ESG, Northern Trust Asset ManagementPaula DiPerna
Special Advisor, CDP North AmericaJessica Robinson
CEO, ASRIA

Attend our Live Facebook Q&A Event – Careers in Credit and Banking, on 30th Jan 2015, 4pm IST at https://www.facebook.com/events/1404859183144414/