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Every fixed income portfolio has inherent macroeconomic risks. Our core plus fixed income portfolio managers are intentional about how to approach these risks, using a top-down assessment of the credit cycle to help determine overall portfolio quality, liquidity and price transparency: https://lnkd.in/eiPCi6uE #CorePlus #FixedIncome

Good momentum on US corporate bond market continues...

📢 Why Liquidity Matters in the Corporate Bond Market 🔶 By DANIEL JARK - Recently Updated: NOVEMBER 2024 (Investopedia) Reviewed by JeFreda R. Brown Fact checked by Michael Rosenston ✴ Liquidity risk in the corporate bond market can lead to increased price volatility, impacting investors' ability to buy or sell bonds without causing significant price changes. This risk undermines market stability, as it can exacerbate financial stress during economic downturns, making it challenging for investors to execute trades swiftly and efficiently. 💡 Beyond liquidity risk, consider these three other risks in the corporate bond market: 1️⃣ Credit risk arises from the potential for a bond issuer's financial instability or default, which can lead to a loss of principal and interest, affecting expected investment returns. 2️⃣ Interest rate risk involves fluctuations in market interest rates 📈📉 that inversely affect bond prices. Rising rates can decrease bond values, leading to capital losses for investors seeking to sell before maturity. 3️⃣ Inflation risk occurs when rising inflation erodes the purchasing power of fixed interest payments from bonds, diminishing real returns and reducing the investment's overall value over time. 📣 Read further (Investopedia.com): A corporate bond's liquidity largely governs its ability to make large-scale, low-cost asset trades without triggering a noticeable price change. Indeed, the relationship between a bond's liquidity and its yield spread has been heavily researched in studies such as "Market Liquidity and Trading Activity" and "The Illiquidity of Corporate Bonds" […] Link: https://lnkd.in/dvjbvdZ

Difference Between Money Market and Capital Market The money market involves the purchase and sale of large volumes of very short-term debt products, such as overnight reserves or commercial paper, whereas capital markets are financial markets where long-term debt and equity-backed securities are traded. The differences between the money market and the capital market are as follows: ▪️Duration: Money market deals with short-term borrowing and lending, while capital market focuses on long-term investments. ▪️Instruments: Money market involves instruments like commercial paper, while capital market includes assets like stocks and bonds. ▪️Purpose: Money market addresses short-term liquidity needs, while capital market supports long-term funding and growth. ▪️Risk and Return: Money market generally offers lower returns with lower risk, whereas capital market returns can be higher but with potentially higher risk. ▪️Participants: Money market participants are often banks and financial institutions, while capital market involves investors, companies, and governments. ▪️Market Maturity: Money market instruments have shorter maturity periods, while capital market securities have longer durations. ▪️Regulation: Money market is closely regulated to maintain stability, while capital market has comprehensive regulations to protect investors and ensure transparency. Thanks for reading….

Explore the future of CLOs as we unpack the effects of interest rates, volatility, and the shift between syndicated loans and private credit. Stay ahead of the curve! https://bit.ly/41Bvenv #PrivateCredit #AlternativeCredit #ShareUBS

Private credit, which can offer floating interest rates that increase in tandem with benchmark rates, has seen significant growth in recent years and could become a $2.8 trillion market by 2028. See how. #PrivateCredit #Markets #MorganStanley

What are Capital markets? Capital markets refer to the platforms and mechanisms that enable the buying and selling of long-term financial instruments, such as stocks, bonds, and other securities. These markets facilitate the raising of capital by companies, governments, and other entities, and provide investors with opportunities to invest in a wide range of assets. Key components of capital markets: 1. Stock markets (equity markets): where shares of companies are traded. 2. Bond markets (fixed income markets): where debt securities are traded. 3. Commodity markets: where physical goods (e.g., gold, oil) are traded. 4. Derivatives markets: where contracts based on underlying assets (e.g., options, futures) are traded. 5. Currency markets (forex): where currencies are traded. Functions of capital markets: 1. Capital formation: raising funds for companies and projects. 2. Risk management: allowing investors to manage risk through diversification. 3. Liquidity provision: enabling buyers and sellers to trade securities easily. 4. Price discovery: determining market prices for securities. 5. Regulatory oversight: ensuring fair markets and protecting investors. Capital markets play a crucial role in: 1. Economic growth: by facilitating access to capital for businesses and projects. 2. Wealth creation: by providing investment opportunities for individuals and institutions. 3. Risk management: by allowing investors to manage risk through diversification. Key players in capital markets: 1. Investment banks 2. Broker-dealers 3. Asset managers 4. Hedge funds 5. Regulatory bodies (e.g., SEC, central banks) In summary, capital markets are essential for facilitating the flow of capital, managing risk, and promoting economic growth, while providing investment opportunities for individuals and institutions.

🌟 Understanding Coco Bonds: A Powerful Investment Instrument 🌟 Hey there LinkedIn fam! 🌍 Today, let's talk about Coco bonds, an intriguing investment option that benefits both banks and investors. 🏦💼 Coco bonds, short for "Contingent Convertible" bonds, that are convertible into equity if a pre-specified trigger event occurs. 📈 Owing to their capacity to absorb losses, CoCos have the potential to satisfy regulatory capital requirements. So, what's in it for the banks? 🏦 Advantages for Banks: 🔸 Capital Strengthening: Coco bonds allow banks to strengthen their capital position by providing an additional layer of loss-absorbing capacity. This helps banks meet the minimum capital requirements outlined in Basel III. 🔸 Flexibility: Coco bonds offer banks flexibility in managing their capital structure. If the bank faces financial distress, the Coco bonds can convert into equity, bolstering the bank's capital base and ensuring its stability. 🔸 Risk Management: By issuing Coco bonds, banks can transfer some of the risk to investors. In times of economic downturn or financial stress, the burden of absorbing losses can be shared, reducing the impact on the bank and potentially safeguarding the financial system. Now, let's turn our attention to the advantages for investors! 💼 Advantages for Investors: 🔸 Higher Yield: Coco bonds generally provide higher yields compared to traditional bonds, offering investors the potential for increased returns on their investment. 🔸 Potential for Capital Appreciation: If the bank's financial health improves and the Coco bonds convert into equity, investors can benefit from potential capital appreciation if the bank's stock price rises, leading to additional gains. 🔸 Risk Mitigation: Coco bonds help mitigate the risk of a bank's failure by converting into equity when certain conditions are met. This provides some level of protection to investors and contributes to the stability of the financial system. #Finance #Investing #CocoBonds #BaselII

Point Of Differences Between Money Market and Capital Market The money market involves the purchase and sale of large volumes of very short-term debt products, such as overnight reserves or commercial paper, whereas capital markets are financial markets where long-term debt and equity-backed securities are traded. The differences between the money market and the capital market are as follows: ▪️Duration: Money market deals with short-term borrowing and lending, while capital market focuses on long-term investments. ▪️Instruments: Money market involves instruments like commercial paper, while capital market includes assets like stocks and bonds. ▪️Purpose: Money market addresses short-term liquidity needs, while capital market supports long-term funding and growth. ▪️Risk and Return: Money market generally offers lower returns with lower risk, whereas capital market returns can be higher but with potentially higher risk. ▪️Participants: Money market participants are often banks and financial institutions, while capital market involves investors, companies, and governments. ▪️Market Maturity: Money market instruments have shorter maturity periods, while capital market securities have longer durations. ▪️Regulation: Money market is closely regulated to maintain stability, while capital market has comprehensive regulations to protect investors and ensure transparency. Thanks for reading….

Explore the future of CLOs as we unpack the effects of interest rates, volatility, and the shift between syndicated loans and private credit. Stay ahead of the curve! https://bit.ly/3OXkuIB #PrivateCredit #AlternativeCredit #ShareUBS