FICC Focus

“There’s a growing trend to get in front of these names a little earlier...FOMO is alive and well in the creditor community...no one wants to find out a deal has been done around them. Particularly if it is an aggressive up-tier exchange,” Fidelity Investments’ Nathan Van Duzer says on this month’s State of Distressed edition of the FICC Focus Podcast.In this episode, Bloomberg Intelligence global credit strategy head Noel Hebert and distressed credit analyst Philip Brendel discuss how SVB’s demise stirred up distressed supply in March. Then, they have an in-depth feature interview with Van Duzer on the workout playbook and how the restructuring business has changed over the past 20 years (5:20). Bankruptcy litigation analyst Negisa Balluku and Bloomberg News’ Eliza Ronalds-Hannon also join the podcast for a roundtable discussion of distressed topics, including Johnson & Johnson’s second try at settling talc claims in Chapter 11, 3M, Voyager Digital, FTX, Bed Bath & Beyond, AMC Entertainment, Cineworld and Diamond Sports (1:15:10).

Adding duration to fixed income portfolios will be attractive as the economy slows later this year, Amundi US’ head of fixed income Jonathan Duensing explains to Bloomberg Intelligence Chief US Interest Rate Strategist and host Ira Jersey on this Macro Matters edition of the FICC Focus Podcast. Duensing discusses how Amundi analyzes markets prior to investment decisions, noting his team’s bottom-up approach. He says mortgage-market extension has made evaluation of the sector easier. On the recent banking turmoil, Duensing suggests risks may be quelled thanks to quick policy action. Regulators did a good job ringfencing the regional banks over the the past month to avoid contagion to the broader financial system, Duensing says.In the Interest Rate Intro segment of the podcast, US Rate Strategy Associate Will Hoffman asks Jersey about the difference between Libor and secured overnight financing rate (SOFR). Jersey explains that SOFR isn’t a like-for-like replacement and suggests that the Bloomberg Short-Term Bank Yield (BSBY) might be better for assessing financial liquidity risk.

In our latest FX Moment Podcast, host Audrey Childe-Freeman, Bloomberg Intelligence (BI) chief G10 FX strategist, talks about the Swiss economy, the SNB outlook and the Swiss franc prospects with Valerie Lemaigre, head of Investment Office and chief economist at Banque Cantonale de Geneve. In particular, Valerie and Audrey touch on how the Swiss growth and inflation outlook may impact the SNB's near-term monetary policy decisions and the consequences for the Swiss franc outlook.In a broadly weaker-dollar environment -- and despite the recent Credit Suisse predicament -- dollar-Swiss bears are back on track, with 0.90 a feasible level after all, while the risk to the recent 0.97-1.00 euro-Swiss range may become tilted to the upside in a stronger ECB-driven euro world.

As the error bands around the outlook widen and cycle turns bring lots of noise, directional views have become much more challenging. In this edition of the All Options Considered podcast on volatility, BI's Chief Global Derivatives Strategist Tanvir Sandhu is joined by Anna Raytcheva, CIO and Founder of Sonya Capital Management. Points covered include key themes from the volatility markets year-to-date, liquidity issues and FX volatility lagging the moves in the bond market.

The market pricing for 2023 Federal Reserve interest rate cuts is off base, Bloomberg Economics Chief US Economist Anna Wong says on this Macro Matter’s edition of the FICC Focus podcast. Wong joins host and Bloomberg Intelligence Chief US Interest Rate Strategist Ira Jersey to discuss her view of the economic environment, the affect the banking turmoil may have going forward, and how the job market could develop. Wong suggests there might be a risk that after a pause, the Fed could be forced to increase interest rates more as inflation may remain sticky.In the Interest Rate Intro segment, US Rate Strategy Associate Will Hoffman asks Jersey about the path of banks’ net interest margins. Jersey highlights how shifts in capital rules and interest being paid on reserves as reasons for higher NIMs, even as the yield curve has inverted. Yet, distributional affects could be striking and leave room for fear of more banking issues.

Interest rate volatility remains a risk, but it’s still possible for the Fed to achieve a “softish” landing, with positive implications for the broader EM complex. In this episode of the Emerging Market Lens & Look-Through podcast, Kevin Daly, investment director at Abrdn Investments joins Bloomberg Intelligence’s Chief EM Fixed Income Strategist Damian Sassower to share his views on emerging and frontier markets as the outlook for global growth deteriorates. 

The inflation vs. recession debate and how that will drive Fed pause vs. pivot dynamics is casting a shadow over credit markets. Key questions include whether the tightening of lending standards will drive up defaults or whether resilient fundamentals will prevent this.In our sixth episode of the Credit Crunch podcast, host Mahesh Bhimalingam, Chief European Credit Strategist at Bloomberg Intelligence and Robert McAdie, Head of Global Cross Asset Strategy at BNP Paribas, discuss the banking crisis, macro headwinds due to central bank tightening and its impact on risk-free and risk assets, including credit. They address yield-curve inversion and its correction, and its impact on the credit curve. The podcast also highlights quantitative tightening by the ECB and BOE and what can cause the markets to spook.

There’s been a sharp drop in rates across the curve, but that’s come at the expense of two bank failures and the introduction of a new depositary back-stop facility from the federal government, according to Bloomberg Intelligence. In this Masters of the Muniverse podcast episode, Vanguard’s head of municipal investment Paul Malloy joins BI strategist Eric Kazatsky to discuss all things macro and micro in the world of munis.

The supply of mortgage-backed securities remains very tight as refinancings have dried up again, Bloomberg Intelligence Mortgage Strategist Erica Adelberg says on the FICC Focus Podcast. In this Macro Matters edition, Adelberg joins Chief US Interest Rate Strategist Ira Jersey to discuss recent housing and mortgage data, remarking on how exceptionally low application volume shows persistent stress on the market. Slow prepayments have caused light gross issuance, even with the Federal Reserve reducing its mortgage holdings. Adelberg says she thinks the Fed won’t consider selling mortgages directly as this could disrupt market function. In the Interest Rate Intro segment, BI Strategy Associate Will Hoffman asks Jersey about the generally inverted yield curve. Jersey notes that the inversion is the market’s expectation of where policy rates will be in the future. He states that the market thinks the yield curve will be inverted for the next two years, but much less so than it is currently.

We have potentially seen the first European high yield index default (bond rated D but not yet out of the index) in nearly two years, while the proportion of stressed and distressed bonds continues to fall given a long rally. Where is the risk in the high yield index and how big a default wave do we see this time? Please join Mahesh Bhimalingam, Chief European Credit Strategist, Bloomberg Intelligence as he discusses the default outlook and trends in a Q&A format with Zachary Swabe, Portfolio Manager for High Yield, UBS Asset Management.We discuss the risk profile of the index by rating and sector, the proportion of CCC and CC-D credits, their evolution and relative valuations, and the impact on supply and returns in detail. We also address the macroeconomic outlook affecting high yield in the near and long term.