High-Yield Bonds: Equity-Like Returns with Lower Risk
On the surface, high-yield bonds look a lot like their relatives in the fixed income world. But in some key respects, high-yield debt acts a lot more like equities than like other bonds. This has some often unappreciated implications for portfolio construction.
read moreUS Housing Finance: Our Vision for a Privately Led System
There’s a growing consensus today that the US government’s huge footprint in the $10.5 trillion mortgage market needs to shrink, with the private sector taking the lead. But there is less agreement on how the transition to a new system should take place. Here’s our perspective as investors in the mortgage market on what is [...]
read moreUS Housing Finance: Let’s Put Quality Before Quantity
The US government’s housing finance policies in recent decades can be summarized by one simple phrase: quantity over quality. The implicit goal was to increase the quantity of housing finance by keeping mortgage rates low and promoting wider home ownership. For several decades, the system worked. But if we view the long-term stability of home [...]
read moreUS Housing Finance: Is Government Involvement Necessary?
A debate is raging about whether the US government’s significant role in housing finance is sustainable. In future articles, I will explain in detail why we believe the private sector needs to play a greater role in the future of housing finance. But for now, let’s take a step back and ask a key question. [...]
read moreDo “Risk-Free Assets” Still Exist?
The current sovereign-debt crisis in Europe is raising long-term questions about some of the bedrocks of finance and investment theory. Namely, are the concepts of a “risk-free rate” and “risk-free assets” still meaningful when the creditworthiness of so many developed countries is under threat?
read moreGeneral Obligation Bonds Were Never Risk Free
You may have seen an article on the front page of The New York Times business section on December 23, “Bankruptcy Filing Raises Doubts About a Bond Repayment Pledge”. In our view, it is inflammatory. Below, my colleague Joseph Rosenblum offers a more balanced approach.
read moreAre Utility Bonds Vulnerable to a Municipal Raid?
A reader who saw our recent article, “Navigating Rocky Municipal Bond Markets,” asked whether any essential service bonds were downgraded this year, and suggested that municipal bond issuers might load up, or even hide, excess debt in its water districts. Here’s the reply from Joseph Rosenblum and our municipal credit team.
read moreNavigating Rocky Municipal Bond Markets
Despite the uncertain impact of recent difficult economic conditions on tax collections, we see significant opportunity to add value in the US municipal bond market. Below, my colleague Michael Brooks reviews where we see the best rewards for risk.
read moreJefferson County Bankruptcy: Who Will Feel the Pain?
In response to our recent article on the Jefferson County bankruptcy, a reader asked “What and how much will be the settlement? Who pays and who gets the pain?” My colleague Michael Brooks replies below.
read moreExcessive Leverage: The Root of All Financial Crises
Today’s European sovereign-debt crisis has much in common with other seemingly unrelated crises of the past decade. The common element? Too much leverage.
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