Displaying items by tag: debt

T. Rowe Price added to its active ETF lineup with the launch of the T. Rowe Price Floating Rate ETF (TFLR). This follows the firm’s launch of the T. Rowe Price High Yield ETF last month. TFLR invests primarily in floating-rate loans and other floating-rate debt securities. The manager, Paul Massaro, will focus on investing in BB and B-rated loans, which he believes are likely to keep volatility at below-market rates over time. He will take a disciplined approach to credit selection, featuring rigorous proprietary research and strict risk control, similar to the mutual fund version of the fund. Massaro had this to say about the launch, "Floating rate bank loans hold a unique position across the broad fixed income landscape given their combination of a floating rate coupon and elevated placement in a company's capital structure – an important risk management attribute. Historically, bank loans have provided a partial hedge against rising rates as well as low return correlations with other asset classes, making them a solid portfolio diversifier.” TFLR trades on the NYSE Arca and has an expense ratio of 0.61%.

Finsum:T. Rowe Price brings its active ETF stable to ten with the recent launch of the T. Rowe Price Floating Rate ETF. 

State Street Global Advisors is teaming up with Barclays’ research business to build and manage active products in systematic fixed income. While systematic equity strategies have been around for a while, the strategy is somewhat new to fixed income due to a lack of data. While most stock trades are easy to track, fixed-income trades are typically over-the-counter, with electronic platforms only handling a part of the business. This makes accessing and harvesting data in fixed-income markets more complex. However, that’s changing. Efficiency in the bond markets is increasing the viability of implementing systematic debt strategies. With fixed income, managers attempt to generate alpha through data analysis that uncovers asset mispricing, according to SSGA. This comes as the demand for systematic fixed income is increasing. According to a State Street survey of 700 investors, 91 percent of institutions are interested in using systematic fixed-income strategies over the next 12 months. The survey also showed that investors managing more than $10 billion were most interested in implementing these strategies using investment-grade and high-yield corporate securities.

Finsum: As demand for systematic fixed-income strategies heats up, State Street Global Advisors and Barclays are teaming up to build and manage active systematic fixed income strategies. 

Emerging market debt could be in trouble according to JPMorgan. With a seemingly never-ending Russia-Ukraine crisis as well as rising borrowing costs low grade emerging market debt could be in trouble. A note said that almost half of the sample of the 52 countries are carrying high repayment risk. Generally speaking, spillover risk is high if Russia defaults and Ukraine has to res-structure. All of this is compounded by rising yields which makes repayment even more difficult.

Finsum: For those looking for solutions to rising volatility be careful chasing emerging market debt as a response.

Emerging market debt could be in trouble according to JPMorgan. With a seemingly never-ending Russia-Ukraine crisis as well as rising borrowing costs low grade emerging market debt could be in trouble. A note said that almost half of the sample of the 52 countries are carrying high repayment risk. Generally speaking, spillover risk is high if Russia defaults and Ukraine has to res-structure. All of this is compounded by rising yields which makes repayment even more difficult.

Finsum: For those looking for solutions to rising volatility be careful chasing emerging market debt as a response.

(New York)

Big debt investors are pouring dollars into risky debt markets and products, such as CLOs and their subprime-backed assets. Why you may ask? (as anyone might right now) The answer is that the riskiest borrowers are surviving this downturn much better than anyone expected. Spreads between subprime-backed products and US Treasuries have narrowed sharply, while new deals have seen big demand. According to an analyst at Loomis Sayles “What is surprising is how strong credit performance has been … Fiscal policy is really keeping the subprime borrower afloat”.

FINSUM: Regardless of whether or not you are involved in this market, it is good news that the demand for these securities is actually being driven by fundamentals. It is both a sign of economic resilience, and also of market rationality.