Sitting in my office watching the wind pick up and waiting for cyclone Alfred to hit the Queensland Coast has me thinking about catastrophe bonds. They are a sort of insurance and spread the risk of catastrophic events like cyclones.
There are other sorts of significant changes in global markets at the moment as the new Trump administration rewrites global allegiances.
There are plenty of divergent opinions this week.
To invest in US bonds or not? And if so, which sectors? Chris Iggo from AXA Investment Managers is in the ‘yes’ camp, raising the possibility of decent returns for ETF investors across the asset class. While Benoit Anne from MFS Investment Management, says US economic data is strong but the risk has swung from a recession to a no landing, with rates higher for longer. He favors credit over duration.
High yield bonds act more like the underlying equities than lower risk, investment grade bonds. This week we share two opposing views on the sector. Mike Della Vedova from T. Rowe Price, explains why he maintains a favorable outlook even though spreads are near post-GFC lows, while Ninety One’s Multi Asset Credit team, thinks there is better value elsewhere.
There were two new subordinated bonds launched this week. One raised $1.4 billion.
MA Financial has a new listed credit income trust. Tune into the company’s Frank Danieli’s excellent podcast if you haven’t already.
Have a good week and stay safe!
