BLOG

Surging Corporate-Bond Supply: Reason to Worry? 

In the months since the onset of the COVID-19 pandemic, companies issued a large amount of corporate bonds. As a result of this surge, corporate debt has grown substantially — a burden that institutional credit investors may wish to monitor closely.

BLOG

Chinese convertibles: Equities in fancy dress? 

Chinese corporate bonds that convert to A shares display equity-like characteristics. But investors who view these securities as equities in disguise are overlooking the complexities of the asset class.

BLOG

Santander’s Coco extension: The New Market Norm? 

Banco Santander announced it would extend — i.e., not call — its additional-tier-one contingent-convertible (coco) bond. Was the market caught off guard?

BLOG

Investing in Convertible Bonds When Rates Rise 

Is my convertible bond more like a stock or a bond? How can I identify convertible bonds offering protection from rising rates?

BLOG

Stress-Testing Risk-Parity Strategies 

The recent surge in volatility took some investors by surprise: The level of the VIX doubled in a day, and put an end to some strategies that involved short selling of the VIX. But larger exposures to rising volatility may be hiding elsewhere, including in volatility targeting and risk-parity strategies designed to better balance risk across asset classes. We stress tested potential scenarios to explore the vulnerabilities.

BLOG

Don’t Let CoCo Bond Risk Sneak Up On You 

Convertible contingent securities — known as “CoCo bonds”-- are a popular form of hybrid debt, but they can be hard to value when issuers head into troubled waters. These securities are a form of risky debt (typically issued by European financial institutions) that convert to equity when a predetermined trigger is met, such as when the issuer’s capital or balance sheet plunges in value.