All articles by Caroline Hay – Page 8
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Features
Reducing the deficit top priority
With the third largest budget deficit in the world, Italy needs its bond market to be more attractive than ever to investors. Now that Romano Prodi is officially in charge, the realities of sorting out the burgeoning deficit hit home hard. He has acknowledged that the public accounts are in ...
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Features
Bulls vie with bears
Yield curve/duration While investors may have been just slightly sceptical about the eye-opening rise in the German Ifo index, taking it to a 15-year high, news that the European Commission composite index was also on the rise, up for the fifth consecutive month to its highest level for five years, ...
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Features
Europe on slow crawl upward
Yield curve/duration Yield curves have been adjusting to investor forecasts on what the European Central Bank (ECB) might do next. Whereas last month there was debate about whether there would be another rate hike in the first half of the year, the consensus is now swinging to the opinion that ...
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Features
Europe on slow crawl upward
Yield curve/duration The ECB duly raised its Refi rate to 2.5% on 2 March, a move which came as no surprise to market participants. What had more influence on the short end of the yield curve were comments from the ECB. Firstly, president Trichet said the bank was “ready to ...
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Features
Reformed character
In terms of geographical size and population, Belgium is one of the Euro-zones’s smaller member states, However back in the early 1990s Belgium was in the ignominious position of having one of Europe’s largest debt burdens. The financial figures at that time were especially grim: Belgian national debt as a ...
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Features
Bonds worthy of 'Celtic Tiger'
Towards the end of 2005 both Moody’s and Standard and Poor’s (S &P), the rating agencies, reaffirmed Ireland’s AAA credit rating status, both citing the strength of government finances, favourable demographics and future pension liabilities. The National Treasury Management Agency (NTMA), established in December 1990, is justifiably proud of Ireland’s ...
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Features
Rates on the move
After such voluble hints from European Central Bank (ECB) President Trichet himself, the first Euro-zone rate hike since October 2000 ought to have come as no surprise to the markets. Whether or not any move was necessary is less clear, however, and investors are not convinced that after this move, ...
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Features
The Euro-zone bond success
It is now over six and a half years since the introduction of the euro, and in a recent article, PIMCO’s Emanuele Ravano suggests that the Euro-zone’s bond market should be viewed as perhaps the politicians’ biggest success story. Many of the statistics speak for themselves: The euro government bond ...
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Features
Pricing in credit risks
As Bund yields touch down to another all-time low, do investment grade credit spreads also have further to shrink? “We are not back at the (credit spread) lows we reached back at the end of February/early March this year,” says Klaas Smits of Robeco Asset Management. “And we are not ...
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Features
Intimate world of private placements
Private placements (PPs) are private as opposed to public securities. In the case of PPs, securities are offered directly to a limited number of investors and are exempt from stock exchange listing or public registration and usually unrated. The most common form of private securities are long-term, fixed-rate debt. These ...
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Features
Europe opens up
The geographical spread of covered bonds across Europe is still widening, as more countries implement the necessary legislative frameworks permitting the issuance of covered bonds or, as in the UK or the Netherlands, products are structured to mimic the essential features of covered bonds. Within this growth are other developments. ...
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Features
Covered bonds wagon rolls on
German Pfandbriefe have never defaulted in their more than 230-year existence*, a pretty amazing feat given the turbulent times Germany and the rest of Europe experienced over that era. It has long been this ‘safety’ aspect of Pfandbriefe which has been one of the most attractive features for investors. “We ...
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Features
The changing EMD story
Part of the process of investing in emerging markets (EM) used to be that your double digit returns were gained alongside the very strong possibility that at some point, your portfolio would be engulfed in a wave of selling because of an individual country’s crisis. Things are changing: individual countries ...
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Features
Linkers and inflation outlook
Not viewed as the most exciting of assets for many years, index linked bonds seem to be undergoing something of a renaissance these days. While performance might have dropped off somewhat this year, during 2003 and 2004 most index linked bonds outshone their conventional, nominal bond peers. “Though we are ...
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Features
Volatility at the short end
Although the European Central Bank (ECB) may not have changed official interest rates since the half-point cut back in June 2003, that does not mean to imply interest rates at the short end have also remained unchanged. TheECB may be controlling and setting the very short-term rate - via its ...
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Features
ABS market forges ahead
Europe’s asset backed market enjoyed pretty good health in 2004 – fewer downgrades than upgrades, hardly any defaults, and narrowed spreads. And, says Denis Badalucco, manager of HSBC Asset Management’s Asset Backed Securities (ABS) funds, liquidity also improved over the course of the year. “For our money market asset backed ...
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Features
Steering towards convertibles
Back at the start of this decade, convertibles were one of the darlings of the capital markets, producing equity-like returns (double-digit in those days) with considerably less risk. Conventional/traditional fund managers and the convertible arbitrage hedge funds, both enjoyed excellent performance. The happy times are gone and returns in recent ...
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Features
Tough going for investors
Narrowing credit spreads are good for the borrower and great for the lender or investor if they own the debt while it improves. However, as spreads diminish, so too do prospects for excess returns. Credit spreads have been shrinking for some years now and have reached record lows for some ...
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Features
Europe's high yield comes of age
Last year was good for European high yield – not just in terms of investment returns, but issuance volumes last year were at record levels, passing those achieved in the now notorious Year 2000 at the height of the telecom bubble. Although the period between the spring of 2000 through ...
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Features
The 'shadow' ECB
At the end of 2002 the editor of the German daily Handelsblatt decided it might be an interesting idea to get together a group of leading European economists and strategists and let them shadow the European Central Bank’s decisions and actions on European monetary policy. Today that group of 18, ...
