Business Development Companies (BDCs)
The Business Development Company sector in the US has grown steadily over the past 20 years. While BDCs allow retail investors to gain liquid exposure to portfolios of private companies, their historically high returns have been dented recently by some steep falls in valuations and – in some cases – discounts to net asset values.
Structured Credit Investor Special Report: Data and Portfolio Optimisation
In the newly published special report from Structured Credit Investor (SCI), Mark Faulkner, co-founder, Credit Benchmark, investigates how Credit Consensus data can help support growth in SRT activity.
Economics Nobel Prize Highlights Credit Risk as “Crucial Information”
The recent award of the 2022 Nobel memorial prize in Economics to Bernanke, Diamond and Dybvig for their work on banking regulation and liquidity highlights the connection between credit and liquidity, making the point that credit assessments are a form of market information.
US Basic Materials Credit Trends: Turning Point?
The Basic Materials Industry includes Chemicals, Metals, Mining, Forestry and Paper. Output prices for these sectors have been very volatile in the past 12 months, reflecting recent rapid structural changes in the global economy. However, US Basic Materials has shown a recent turning point.
Not So Healthy? US Health Care Credit Trends
As pandemic-related spending continues to fall, the US Health Care sector is beginning to show credit deterioration.
“Lehman Moment” for European Power Companies – Who Is at Risk?
European Governments are pledging hundreds of billions of Euros in financial aid to power generators and distributors, plus support for consumers facing massive energy price hikes. But an even larger crisis may be lurking in European energy trading, with the FT reporting sector margin requirements as high as €1trillion – vastly in excess of current sector liquidity.
EU Capital Rules to Increase Buyside Trading Costs
New EU capital rules may lead to a fivefold increase in buyside trading costs, potentially rendering this activity unprofitable. With the risk looming of a less vibrant European capital market, it is necessary for the industry, policy makers and regulators to work collectively on appropriate solutions to ensure European savers are not financially penalised.
Transition Matrices: Multi-Notch Downgrades
Credit Benchmark’s Transition Matrices show that post-COVID credit recovery has been strong across most credit categories, but at the same time a significant number of investment grade firms have started to be subject to multi-notch downgrades.
Credit Portfolios and Rising Defaults: Tracking Credit Risk Correlation Shifts
Credit portfolio managers face spiking interest rates and rising defaults, and contagion from one sector to another is a major concern. Consensus credit aggregates show how credit risk correlations between sectors are changing.
CCP Monitor: Improving Risk Trends, Member Upgrades Dominate
The latest Central Counterparty Clearing House (CCP) monitor produced by Credit Benchmark shows further improvements in credit quality in North American and European CCPs. However, as the monitor demonstrates, CCP member risk does not always reflect that of the CCP itself.
