Leverage Loans: Morningstar LSTA and Issuer Consensus Credit Index
After a stellar performance over the past 12 months, the Leveraged Loan total return index is diverging from its respective credit indices.
June 26, 2023
After a stellar performance over the past 12 months, the Leveraged Loan total return index is diverging from its respective credit indices.
Warning signs continue to flash in US Commercial Real Estate, with Industrial & Office sectors worst affected by the persistence of hybrid working. However, Credit Benchmark data shows various US REITs currently with a positive credit outlook.
Latest Credit Benchmark data shows that the credit rating of a country’s financial system is heavily influenced by that of the Sovereign, and, in countries with the strongest credit, the Financial sector is stronger than the Corporate sector.
Is AI all promise, no profit? The Economist suggests equity markets are unconvinced as to the immediate value of AI tech. In credit terms, AI-focused firms are outperforming other Global Tech firms; keeping pace with Global Corporates.
Consensus credit data can fill CDS market gaps for CVA calculations. This insight links real-world PDs to “Synthetic CDS” estimates for unrated, private counterparts.
Recent bank failures and mergers have uncovered transatlantic tensions in the global banking sector. This data at a glance looks at US and EU Banks sectors. Average default risk for US Banks deteriorated for much of H2 2022 ahead of recent volatility. EU Banks default risk has been steadily improving.
Bail-in bonds are a powerful extra prop for bank balance sheets in times of turmoil: AT1 bond issuers showed faster post-COVID credit recovery than most Global Systematically Important Banks, and the gap continues to widen.
The sudden collapse of Silicon Valley Bank has raised questions as to what warning signs were missed. While this may have been a black swan event, bank credit warning signs have been flashing in consensus credit data for the past few months.
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.
Credit Benchmark brings together internal credit risk views from over 40 leading global financial institutions. The contributions are anonymized, aggregated, and published in the form of consensus ratings and aggregate analytics to provide an independent, real-world perspective of credit risk. Risk and investment professionals at banks, insurance companies, asset managers and other financial firms use the data for insights into the unrated, monitoring and alerting within their portfolios, benchmarking, assessing and analyzing trends, and fulfilling regulatory requirements and capital.
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