COVID-19 crisis raises leveraged loan default risks

2020 ◽  
Keyword(s):  
Mutual Funds ◽  
World Market ◽  
Insurance Companies ◽  
Structured Finance ◽  
Loan Default ◽  
Content Type ◽  
The Us ◽  
Default Risks ◽  
Investment Grade ◽  
Different Levels

Subject The market for leveraged loans. Significance Low-rated, heavily indebted companies typically raise money through leveraged loans because they cannot access investment-grade debt. The issuance of leveraged loans has surged since 2008, increasing their systemic importance. Structured finance products known as collateralised loan obligations (CLOs) are the largest buyer of leveraged loans. An asset manager typically buys 100-300 loans and packages them into tranches of bonds representing different levels of risk and return. The US CLO market has more than doubled since 2008 and represents 75% of the world market. Impacts The exposure of insurance companies, pension funds and mutual funds to losses is mounting. As defaults and bankruptcies increase, investors could have to sell other types of assets to meet redemptions or preserve capital. Eventual interest rate rises will help ease the pressure on loans and CLOs, as they are both linked to floating, rather than fixed, rates.

US energy high-yield bonds spur default risk

2015 ◽  
Keyword(s):  
Interest Rates ◽  
Default Risk ◽  
Oil Price ◽  
High Yield ◽  
Content Type ◽  
The Past ◽  
The Us ◽  
Low Interest Rates ◽  
Investment Grade ◽  
Energy Companies

Subject Impact of the oil price drop on energy high-yield bonds. Significance The over 50% oil price drop since June 2014 is hitting bonds issued by energy companies, particularly those issued by sub-investment grade corporates. The US high-yield bond market has been growing rapidly over the past five years. The shale boom has generated considerable investment, mainly funded through the issuance of these bonds which benefit from historically low interest rates. As the oil price has plunged, the spread over Treasury yields paid by the average issuer in the energy subsector has more than doubled between July and the December 2014 peak. Impacts Yields currently offered by the energy subsector are not far from pricing in a default scenario. Persistently low oil prices will further darken the outlook for the energy subsector and the high-yield market generally. A possible default cycle in the energy sector could accelerate outflows, overstretching the sector further.

Central Europe external risks still outweigh internal

2017 ◽  
Keyword(s):  
Mutual Funds ◽  
Central Europe ◽  
Federal Reserve ◽  
Political Crisis ◽  
Checks And Balances ◽  
Content Type ◽  
Political Risks ◽  
The Us ◽  
Asset Purchases ◽  
Law And Justice

Significance Investors are brushing off mounting political risks in Poland despite an erosion of democratic checks and balances under the nationalist Law and Justice (PiS) government. In Romania, despite the rapidly escalating political crisis, the leu has strengthened slightly against the euro since the start of this year, since when the yield on benchmark ten-year Romanian local bonds has risen by 25 bps to 3.6%. This is still significantly below the 5% level before the ‘taper tantrum’ in mid-2013, which stemmed from the unexpected decision by the US Federal Reserve (Fed) to end its asset purchases. Impacts After post-US election outflows, EM mutual funds are once again enjoying sizeable inflows, with EM debt funds reaching a four-month high. Some of the strain on EM currencies will be relieved by the 2.5% fall in the dollar index against a basket of its peers since end-December. Smaller export-led CEE economies will benefit from factory orders in Germany rising in December at their fastest pace in 30 months.

US rates rift will fuel financial market volatility

2019 ◽  
Keyword(s):  
Financial Markets ◽  
Bond Markets ◽  
Open Market ◽  
Federal Open Market Committee ◽  
Content Type ◽  
Us Economy ◽  
China Trade ◽  
The Us ◽  
Investment Grade ◽  
Global Growth

Subject Financial markets outlook. Significance The decision of the US Federal Reserve (Fed) on September 18 to lower its main policy rate while not assuring investors that it will continue to loosen monetary policy is exposing divisions within the Federal Open Market Committee (FOMC), and between the Fed and bond markets. The ‘hawkish cut’ came with three dissensions, reflecting the disconnect between the resilient US economy and the deterioration in the global growth outlook. Impacts Cautious investor optimism that a US-China trade truce will be struck is fuelling US equity gains, but a substantial deal seems unlikely. The Brent oil price fell back within days following the drone attacks on Saudi Arabian oil facilities, but more short spikes are possible. Almost one-third of investment-grade government and corporate bonds are negative yielding; those with zero lifetime coupon are riskiest.

Explaining hospital performance via the cube one framework

2015 ◽  
Vol 2 (1) ◽  
pp. 73-90 ◽  
Author(s):  
Phoebe M. Massimino ◽  
Richard E. Kopelman ◽  
Meg L. Joseph
Keyword(s):  
Boards Of Directors ◽  
Theoretical Perspective ◽  
Three Dimensional ◽  
Hospital Performance ◽  
Insurance Companies ◽  
Multiple Perspectives ◽  
Dimensional Approach ◽  
American Hospital ◽  
Content Type ◽  
The Us

Purpose – The purpose of this paper is to introduce a relatively new theoretical perspective – the Cube One framework – which along with the Cube One Input-Output model provide a conceptual explanation of overall hospital performance. Further, this framework provides information pertinent to organizational improvement. Design/methodology/approach – Multiple sources of data, including the US Department of Health and Human Services’ Centers for Medicare & Medicaid Services (CMS) patient satisfaction ratings, the “US News & World Report’s Best Hospitals” (disaggregated) ratings, the American Hospital Directory efficiency metrics, and Glassdoor employee satisfaction ratings, were used to test five hypotheses. Findings – Three sets of capabilities: patient-, employee-, and efficiency-related were positively associated with hospital performance. The model explained 38 percent of the variance in hospital performance. Practical implications – By adopting a multi-disciplinary, three-dimensional approach, the framework allows hospital leadership to diagnose areas for improving overall performance. Social implications – Hospitals have divergent stakeholders such as patients, patient’s families, employees, government agencies, insurance companies, administrators, boards of directors, and the community. Management capabilities regarding patients, employees, and the organization itself are crucial to the success of hospitals and all who depend on them. Originality/value – By utilizing a three-dimensional approach, the Cube One framework views performance from multiple perspectives.

International diversification and return differential between the US and the foreign markets

2015 ◽  
Vol 14 (4) ◽  
pp. 382-397 ◽  
Author(s):  
Abdullah Noman
Keyword(s):  
Mutual Funds ◽  
Factor Model ◽  
Foreign Market ◽  
Risk Exposure ◽  
Market Returns ◽  
Foreign Markets ◽  
Content Type ◽  
Conditional Specification ◽  
The Us ◽  
Information Variable

Purpose – This paper aims to examine the impact of the return differential between the domestic and foreign markets on the risk exposure of country mutual funds (CMFs). It is argued that when US market returns are higher than the foreign market returns, the returns chasing investors will tilt their portfolio toward the US market assets, increasing the co-movement between the US market and CMF return. Design/methodology/approach – The sample includes 19 exchange traded funds (ETFs) and 18 closed-end mutual funds (CEFs) over the period between 2001 and 2011. A static two-factor model is used to get the benchmark results. On the other hand, a conditional specification is used, with the return differential as the information variable, to capture the variation in the exposure of the country funds to their underlying risks. Findings – Empirically, the authors find results that partially support their argument. The results of the static two-factor model indicate that the CMFs are exposed to the foreign market risks, whereas the local (US) market risk is not generally priced. The results obtained from the conditional specification, however, shows that the estimated US betas are significant for a number of CMFs. Practical implications – A possible interpretation of this finding is that the return differential encourages return chasing behavior of the US investors documented in the international investment literature. This, in turn, may contribute to the time-varying exposure of the CMF return to their underlying risk factors. The findings of the paper have important implications for the investors as the time variation in risk exposure of CMFs causes fluctuation in diversification benefits over time. Originality/value – To the best of the authors’ knowledge, this is the first paper that uses return differential as the information variable in a conditional factor model.

Normalisation threatens Emerging Europe’s bond markets

2017 ◽  
Keyword(s):  
Interest Rates ◽  
Federal Reserve ◽  
Emerging Market ◽  
Central Banks ◽  
Capital Inflows ◽  
Bond Markets ◽  
Content Type ◽  
The Us ◽  
Asset Purchases ◽  
Investment Grade

Subject The risks to Emerging Europe’s bond markets from the removal of monetary stimulus. Significance The IMF has warned that the withdrawal of monetary stimulus by the US Federal Reserve (Fed) is likely to reduce capital inflows into emerging market (EM) economies. Emerging Europe is particularly vulnerable, thanks to the additional risks posed by the reduction of asset purchases by the ECB. Corporate bonds are most at risk because of the rapid compression in spreads on sub-investment grade debt, at their lowest levels since the financial crisis. Impacts Hawkish signals from central banks and US tax cuts are taking the benchmark ten-year US Treasury yield to its highest level since mid-March. However, dollar weakness will ease some of the strain on EM currencies and local bonds. With low core euro-area inflation reducing pressure to end QE, the ECB is unlikely to raise interest rates before 2019.

Analysis of the survival capacity of mutual funds: a systematic review of the literature

2017 ◽  
Vol 13 (4) ◽  
pp. 440-474 ◽  
Author(s):  
Laura Fabregat-Aibar ◽  
Antonio Terceño ◽  
M. Glòria Barberà-Mariné
Keyword(s):  
Systematic Review ◽  
Literature Review ◽  
Mutual Funds ◽  
Design Methodology ◽  
Review Of The Literature ◽  
Academic Interest ◽  
Content Type ◽  
The Us ◽  
Survival Capacity ◽  
The Relationship

Purpose The purpose of this paper is to carry out a literature review to determine which variables have the greatest impact on the survival capacity of mutual funds, and if these variables also have an influence on the various ways in which mutual funds disappear. Design/methodology/approach The authors carry out a systematic review of the literature on mutual funds and identify the main features that affect their capacity for survival. Findings The results show that most of the articles are based on data from the US market and that the two most studied variables are the return and the size of the fund. Furthermore, the relationship between the behaviour of variables and the disappearance of funds has mainly been analysed by comparing surviving and non-surviving funds, but without specifying the way in which they disappeared. Finally, the results show that there is no single methodology for examining the survival of funds. Originality/value In the financial literature, no previous literature review has focused on the factors that influence the survival capacity of mutual funds. The authors consider that this review will provide a broader and more realistic vision of the level of academic interest in this field and identify any gaps that exist in the literature available.

Turkish markets will suffer fallout from failed coup

2016 ◽  
Keyword(s):  
Foreign Capital ◽  
Credit Rating ◽  
Military Coup ◽  
Government Bond ◽  
External Financing ◽  
Content Type ◽  
Us Economy ◽  
The Us ◽  
Foreign Institutional Investors ◽  
Investment Grade

Significance S&P is concerned that the political fallout from the failed July 15-16 military coup will make it more difficult for the country to meet its large external financing requirements. Since the attempted putsch was launched, the lira has come close to a record low against the dollar. Turkish bonds and equities have also suffered sharp declines, exacerbated by President Recep Tayyip Erdogan's decision on July 21 to impose a three-month period of emergency rule. Impacts Sentiment towards EMs is benefiting from expectations that the US Federal Reserve will raise rates in a very cautious and gradual manner. However, investors may be underestimating the risk of rate hikes this year, as the US economy keeps improving. Turkey has benefited from sizeable inflows of foreign capital into its local government bond market partly because of much higher yields. If Turkey lost its investment-grade credit rating, ratings-sensitive foreign institutional investors could sell much of its government debt.

The mitigating role of blockchain-enabled supply chains during the COVID-19 pandemic

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yangchun Xiong ◽  
Hugo K.S. Lam ◽  
Ajay Kumar ◽  
Eric W.T. Ngai ◽  
Chunyu Xiu ◽  
...  
Keyword(s):  
Supply Chains ◽  
Matched Control ◽  
Negative Impact ◽  
Test Results ◽  
Content Type ◽  
The Us ◽  
And Control ◽  
Disruption Risks ◽  
Different Levels

PurposeAlthough there have been considerable discussions on the business value of adopting blockchain in supply chains, it is unclear whether such blockchain-enabled supply chains (BESCs) can help firms mitigate the negative impact resulting from the recent COVID-19 pandemic. This study aims to answer this important question.Design/methodology/approachThe authors conduct an event study to quantify the financial effects of the COVID-19 pandemic and compare the differences in such effects between treatment firms that have adopted BESCs and matched control firms that have not adopted BESCs. The authors also perform a regression analysis to examine how the role of BESCs in mitigating COVID-19's negative impact varies across firms with different levels of supply chain leanness and complexity. The analysis is based on 88 treatment firms and 88 matched control firms, all of which are publicly listed on the US stock markets.FindingsThe test results suggest that although both the treatment and control firms are negatively affected by the COVID-19 pandemic, the effect is less negative for the treatment firms compared to the control firms, demonstrating the role of BESCs in mitigating the negative impact caused by the COVID-19 pandemic. Moreover, the mitigating role of BESCs is more pronounced for firms with lean and complex supply chains.Originality/valueThis study is among the first to provide empirical evidence on the mitigating role of BESCs during the COVID-19 pandemic, highlighting the importance of adopting blockchain in supply chains with high uncertainties and disruption risks.

Investment behaviour in mutual funds: is it a knowledge-based decision?

Kybernetes ◽  
2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Luminița Nicolescu ◽  
Florentin Gabriel Tudorache
Keyword(s):  
Mutual Funds ◽  
Influencing Factors ◽  
Capital Markets ◽  
Investment Decision ◽  
Content Type ◽  
Knowledge Based ◽  
Investment Decision Making ◽  
Available Information ◽  
Different Levels ◽  
Investment Behaviour

Purpose This paper aims to make an analysis of investment behaviour in mutual funds, by looking at different investment decision influencers and trying to identify the extent to which the investment decision is knowledge-based. The paper has three main purposes, namely, to assess the degree to which the considered factors influence investment decision-making in young capital markets from Central and Eastern Europe (CEE); to compare the investment behaviour in the three considered countries; and to characterise investment behaviour in periods of economic turbulence. Design/methodology/approach The researchers considered a model of investment behaviour comprising six influencing factors. Inferential statistics through multiple linear regression was applied using the MATLAB R2014a software. The decision to invest was measured by the flow of new capital attracted by the fund (dependent variable) and the considered influencing factors (independent variables) were: the size of the fund, the risk associated to the fund, the growth of the fund, the growth of the fund category, the performance of the fund in its category. The research was conducted in Romania, Slovakia and Hungary. The period of study included the global economic crisis of 2007-2008. Findings The results illustrated that all considered factors do have an influence on the investment behaviour of investors in CEE, but with different levels of impact. The study concludes that the investment decision is partially knowledge-based, as investors in the region consider only some of the available information when making the decision to invest. Investment behaviour of investors in CEE is rather similar than dissimilar when deciding to invest in mutual funds. However, based on the differences between countries, it can be stated that the Hungarian investor is more mature and more informed than the others, when making investment decisions. Originality/value The study contributes to the exiting literature through the analysis of investment behaviour in young capital markets that are less studied in the literature. The limited number of studies considering mutual funds, usually comprise one fund category, while the present research considers all five most prevalent mutual funds categories for the studied period. It also contributed by collecting data from a less studied geographical region, CEE with three specific case studies, namely, Romania, Slovakia and Hungary that are looked at in a comparative manner.

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