Whatever their motivations, spin-offs can have a dramatic effect on the performance of the associated corporate bonds, so it is crucial that fixed-income investors conduct the necessary analysis. Nathan N.J. Grant, CFA, has some advice.
Jason Voss, CFA, provides his picks for Weekend Reads for Investors. This edition curates stories on the potential repeal of the tax deduction corporations in the United States receive on debt payments, the end of Big Oil, how we can recognize machine consciousness, and more.
Post-financial crisis, the volume of outstanding bonds has grown. At the same time, however, consolidation among banks and broker/dealers has cut the number of market makers, and new regulations have reduced the capital these companies can commit to fixed-income inventories.
The book is a collection of 15 papers on the current challenges in sovereign debt restructuring and alternatives for resolving them. For investment analysts, it is a valuable resource of systematic analysis, insight, and data on an increasingly important topic.
Tucked away in the early days of the financial crisis, the auction rate securities (ARS) debacle has been largely relegated to the dim recesses of memory. However, investors and advisers should not downplay its significance.
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The Financial Conduct Authority's Nausicaa Delfas said the UK and the EU must create derivatives contractual certainty after Brexit "either through an implementation period or by some other means." Delfas said, "This is an example of a situation where both sides could take unilateral approaches to dealing with the risk, but where a bilateral solution with the EU would be preferable." Futures & Options World (subscription required) (19 Jul.)
Securities and Exchange Commission Chairman Jay Clayton has instructed his staff to review whether there are opportunities to "enhance the framework for oversight" of electronic platforms that trade bonds. The action came after Democratic commissioners called for disclosure of potential conflicts of interest by those platforms. MLex (subscription required) (19 Jul.)
UK Prime Minister Theresa May is urging the EU to "evolve" its position regarding the border between the Republic of Ireland and Britain's Northern Ireland after Brexit. The EU proposal "is something I will never accept, and I believe no British prime minister could ever accept," she is expected to say in a speech scheduled for Friday. The Guardian (London) (19 Jul.)
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