The Savvy Investor Debt and Credit outlook section comprises white papers, articles and institutional research on the fixed income world from leading global asset managers, researchers and investment consultants.
According to the Bank of International Settlements, the global credit market or bond market i.e. bonds currently in issue, is estimated to be valued at over $110 trillion. The global debt markets are utilised by governments and companies to borrow capital from investors. In return for a lump sum (principal), investors who purchase a debt security will receive periodic interest payments (coupons) with their principal returned in full at the end of the lending period (maturity date).
Debt market maturity dates can range from short-term overnight borrowing between banks to long-term 100-year bonds issued by governments. The main participants in the credit markets are financial institutions where trading of bonds, notes, commercial paper and other debt instruments takes place either by telephone or electronic means. Since there is no single exchange for debt instruments, most of the trading in credit products takes place over the counter (OTC) between institutions. Examples of such institutions are central banks, commercial banks, pension funds and general investment funds.
Bond prices are driven primarily by perceived or actual changes in interest rate and inflation expectations as well as credit quality. Notable credit rating agencies who monitor the quality of debt instruments in issue are Standard and Poor’s, Moody’s Corporation and Fitch.
In light of central bank intervention in credit markets since the Global Financial Crisis of 2007-8, yields on debt products have been artificially depressed on a global basis. This has created a “lower for longer” interest rate phenomenon – the result of which is that global government debt with a negative yield-to-maturity now exceeds $12.5 trillion. For pension fund managers, who rely on a specific level of income yield for retirees, this is a vexing modern-day occurrence.
Savvy Investor’s research publishers are mindful of the financial headwinds buffeting credit market institutional investors and as such our curated white papers, articles, blogs, videos and podcasts give due consideration to the following debt and credit markets and associated fixed income investment themes:
- Government bonds & sovereign bonds
- Corporate bonds
- Municipal or Muni-bonds
- High yield
- Index-linked or inflation linked bonds
- Credit market liquidity
- Emerging market debt
- Local currency bonds
- Central bank policy
- Negative rates
- Quantitative easing (QE)
- Modern Monetary Theory (MMT)
- Fixed income ESG
- Fixed income factor investing
Debt and credit outlook articles and research are published periodically by the major asset managers and specialist researchers. Theoretical papers in the fixed income area widely read by Savvy Investor members include: