The US high yield market has grown larger and riskier since the financial crisis. More debt, of lower quality, with weaker covenants means the coming downturn will be bigger, longer and uglier.
Memos
How ASIC Can Become a Feared Regulator
The behaviour of AMP exposed by the Royal Commission shows that it had no fear of ASIC. Here’s how ASIC can change this.
Credit Snapshots – April 2018
Covenant Lite You know it’s late in the credit cycle when credit investors give away their key protections in return for just a little more yield. This acquiesce comes in different forms, including higher levels of leverage, longer dated debt, subordinated debt and weakened or eliminated covenants commonly referred to as “covenant lite”. This risk […]
The Economics of Population Growth
This article discusses both the obvious and the unseen implications of population growth, with the aim of allowing all Australians and particularly our leaders to consider whether a bigger Australia is better.
Credit Snapshots – March 2018
Bite size updates on the Libor spike, Toy’s R Us, franking credit changes and the Banking Royal Commission
Credit Snapshots – February 2018
Bite size updates on US government debt, Chinese margin lending and bank capital
Short Volatility is a Legitimate Investment Strategy
The criticism of short volatility strategies in the wake of the recent VIX spike is misguided and uniformed. If correctly managed, short volatility strategies have a history of producing outsized returns.
IMF on China: A Downturn is Inevitable
A recent paper from the IMF concludes that China may be able to continue its current trajectory for the medium term but in the long term a downturn, likely accompanied by a banking crisis is inevitable.