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  • Navigating Rocky Municipal Bond Markets [View article]
    Hi Robert:
    It is always possible that a municipality would try to ease its general fiscal pressures by tapping (forgive the pun) into the resources of its water or sewer utility, if any. However, this is not particularly common in the universe of medium- to large-sized utilities that we follow.
    For more on this topic, see "Are Utility Bonds Vulnerable to a Municipal Raid?" on blog.alliancebernstein...
    Dec 14 03:48 PM | Likes Like |Link to Comment
  • Time For Caution On 'Dim Sum' Bonds [View article]
    We are simply saying we believe that, longer term, the dim sum bond market will be viable and provide opportunities for investors to capture attractive risk-adjusted returns. At the moment, however, this market is too expensive because of supply-and-demand imbalances that favour bond issuers, not investors.

    Our research also suggests that the renminbi will appreciate over the medium term by around 5% per year. Longer term, we estimate that it is 20% to 25% undervalued. We believe that investors could take advantage of the potential appreciation of the currency.

    As a result, we favor investing in other Asian bonds now, and overlaying these positions with a currency hedge to gain exposure to the renminbi. This would provide exposure to both potential appreciation in the renminbi and a diverse pool of government and corporate bonds offering yields of around 4% to 4.5% as well as potential capital gains. In contrast, dim sum bonds now yield around 2% to 3% and pose the risk of mark-to-market capital losses as supply increases to meet demand.

    I hope this answers your question.

    Hayden Briscoe
    Dec 9 10:32 AM | Likes Like |Link to Comment
  • How To Diversify When Markets Are Highly Correlated [View article]
    Thank you for your comment. We expect some of our blog posts to address more specific investment ideas, but we also think broad discussions on risk management is appropriate—and that is, after all, Andrew Chin’s purview, as head of Quantitative Research and Investment Risk Management.
    Dec 2 12:32 PM | Likes Like |Link to Comment