State Street Rolls Out Short Term Corporate Bond ETF
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Wed, Oct. 1, 3:00 PM| Comment!
Mon, Sep. 8, 1:09 PM
- The PowerShares LadderRite 0-5 Year Corporate Bond Portfolio (Pending:LDRI) is set to launch on Wednesday and will use an equal weighted annual maturity ladder strategy.
- "Investors looking to preserve capital and generate income in an uncertain interest rate environment may want to consider LDRI as a possible solution given its short-term nature and laddering approach" said Lorraine Wang, Invesco PowerShares Global Head of ETF Products and Research, in a statement earlier today.
- Other short term investment-grade corporate bond ETFs: VCSH, CSJ, SCPB, SLQD
Wed, Aug. 6, 10:40 AM
- The First Trust Enhanced Short Maturity ETF (NASDAQ:FTSM) is an actively managed fund which invests in short-duration, investment-grade securities with the objective of delivering current income while providing capital preservation.
- "Over the past few years, in this low interest rate environment, investors in short-term bonds have often been faced with a choice between losing purchasing power safely in high quality bonds with negative real returns, or seeking higher returns from securities that are below investment-grade," said Ryan Issakainen, Senior Vices President and ETF Strategist at First Trust, in a statement.
- The active strategy of the ETF could provide a middle ground for investors looking for short-term securities that could potential offer a high return, but still preserve capital and avoid daily liquidity concerns.
- Other short-term investment grade ETFs: VCSH, CSJ, SCPB, SLQD, RAVI, MINC
Tue, May. 20, 11:44 AM
- With borrowing costs about the lowest on record, and investors lending first and asking questions later, corporate finance officers are busy taking out loans. "My treasurer tells me always borrow when you can, not when you have to," says Shell CFO Simon Henry. "There are huge liquid pools at whatever tenor we need ... There's more capital out there than we can consume."
- The average yield on corporate debt has fallen 61 basis points this year to 4.4%, nearing last year's pre-bond bear market low of 4.1%.
- “The market is pretty hot,” says George Dessing, treasurer of Dutch business-to-business publisher Wolters Kluwer NV which raised 10-year money this month. “We have a preference for longer maturity and especially right now at these low costs it was a no-brainer.”
- ETFs: LQD, VCSH, VCIT, VCLT, CORP, CSJ, CIU, CFT, SCPB, LWC, ITR, CLY, IBND, PICB, QLTA, IGHG, PFIG, SLQD, IGS, CBND, SUBD, IGU, QLTB
Tue, Apr. 22, 11:55 AM
- Maybe surprising to many, long-dated investment-grade corporate bonds are outperforming junk bonds this year, with total returns already of 7.48% vs. junk at 3.3%. It's a turnaround from 2013, when high-yield returned 7.42% vs. a loss of 1.57% for IG paper.
- It's good news for institutional investors like pension funds and insurers, who have been big buyers of the bonds in recent months.
- Investment-grade corporate debt ETFs: LQD, VCSH, VCIT, VCLT, CORP, CSJ, CIU, CFT, SCPB, LWC, CLY, ITR, QLTA, IGHG, PFIG, SLQD, IGS, CBND, IGU, QLTB
- In other junk bond news, DoubleLine's Bonnie Baha says the firm's core fund has cut its high-yield exposure to 3% from 6%. High prices are the reason, says Baha, noting the average price of 104.5 cents on the dollar. Many issuers can force redemptions at 103 cents, and if they don't get called, in a low-rate environment there's extension risk.
- Baha takes note of the proliferation of short-duration high-yield funds. "It's a fallacy to think that just because it’s short-term that bad things can’t happen."
- High-yield ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, BSJG, HYHG, BSJI, ANGL, HYLS, UJB, BSJH, XOVR, THHY, YPRO, SHYG, QLTC, BSJK, HYZD, HYND, BSJJ
Thu, Apr. 10, 10:39 AM
- "The good ole' days are gone," says UBS, cutting its recommendation for U.S. corporate bonds to "small underweight" ahead of what's expected to be the beginning of a rate hike cycle in about a year.
- With spreads already so tight, any further gains from spread tightening will be marginal at best and not enough to make up for rate increases, says the team, which is bearish on both investment-grade and high-yield corporate debt.
- ETFs: HYG, JNK, LQD, HYLD, HYS, VCSH, SJNK, VCIT, VCLT, CORP, PHB, CSJ, CIU, SJB, CFT, HYHG, SCPB, LWC, ANGL, CLY, ITR, QLTA, HYLS, UJB, XOVR, THHY, IGHG, SHYG, QLTC, PFIG, SLQD, HYZD, IGS, HYND, CBND, QLTB, IGU
Tue, Apr. 1, 3:27 PM
- Investment-grade corporate paper returned 2.7% in in Q1 vs. a 1.42% gain for the MSCI World Index of stocks, the first time debt beat equities since Q2 of 2012. This follows stock gains of 27% last year while bonds fell 1.45%, and a near-universal outlook at the start of the year to rotate out of fixed-income and into equity.
- Junk bonds returned 2.86% in Q1.
- Helping, of course, is the decline in benchmark Treasury yields, but corporate balance sheets have improved, with at least some of that related to the rollicking stock market narrowing pension fund deficits.
- ETFs: LQD, VCSH, VCIT, VCLT, CORP, CSJ, CIU, CFT, SCPB, LWC, BSCE, BSCF, CLY, ITR, QLTA, BSCH, BSCG, IGHG, BSCI, PFIG, SLQD, IBCE, IBCB, BSCK, IGS, IBCC, BSCJ, BSCM, CBND, IBDC, IBDA, QLTB, IBCD, IBDB, BSCL, IBDD, IGU
Fri, Mar. 7, 2:14 AM
- General Electric (GE) has taken advantage of continued low rates with a $3B bond sale comprising $2.25B of 30-year notes and $750M in 10-year paper.
- The auction attracted strong demand, mainly due to the not-so-common opportunity to buy debt from the parent company rather than GE Capital. The last time the parent sold bonds was in October 2012.
- GE is rate at AA+ at S&P.
- Meanwhile, following shareholder feedback, GE will end dividend payments to senior management on new stock that has yet to vest.
- ETFs: LQD, VCSH, VCIT, CORP, VCLT, CSJ, CIU, CFT, SCPB, LWC, CLY, ITR, QLTA, IGHG, PFIG, SLQD, ENGN, IGS, CBND, QLTB, IGU
Mon, Mar. 3, 4:32 PM
- Eyeing better growth and sustained low interest rates, Moody's projects the global default rate to drop to 2.2% this year or 61 companies globally, from 2.9% or 66 companies in 2012.
- "Additional factors that support our view of a low default rate in 2014 are the continuous accommodative monetary environment together with ample liquidity, which has and will continue to allow distressed companies to access the capital market and reduce refinancing risk in the near future."
- For perspective, the average default rate since 1983 is 4.7%. It is indeed a golden age for corporate borrowers.
- Related ETFs: LQD, VCSH, VCIT, CORP, VCLT, CSJ, EMCB, CIU, CFT, EMCD, SCPB, LWC, GHYG, CLY, IBND, ITR, CEMB, PICB, QLTA, GLCB, IGHG, SLQD, PFIG, IGS, CBND, IGU, QLTB
Wed, Feb. 12, 4:50 PM
- "The default rate is non-existent," he says, agreeing that fundamentals in high-yield look good. "Instead of a default cycle, we've had a refinance cycle." The issue, however, is valuation. At the end of 2013, the 30-year Treasury yielded about 4%, while BB corporates "unbelievably" yielded just 4.5% - a "remarkably low incremental yield."
- His feelings about overvaluation extend to the investment grade corporate market (LQD) as well.
- Most curious to Gundlach is how universally the long bond is hated at 4%, while junk yielding 4.5% gets so much love.
- Besides Treasurys, Gundlach sees value in emerging market bonds. The risk is in the currency, but this can be eliminated by buying dollar-denominated paper.
- High yield ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, HYHG, BSJG, BSJI, ANGL, BSJH, HYLS, XOVR, THHY, UJB, QLTC, SHYG, BSJK, HYZD, BSJJ, HYND
- Investment grade ETFs: LQD, VCSH, VCIT, CORP, VCLT, CSJ, CIU, CFT, SCPB, LWC, CLY, ITR, QLTA, IGHG, PFIG, SLQD, IGS, CBND, IGU, QLTB
- EM bond ETFs: EMB, PCY, ELD, EMLC, EMCB, VWOB, EMCD, ILB, HYEM, EMHY, LEMB, ITIP, EMAG, EBND, GTIP, PFEM, EMSH, SEMF, IEMF, LEMF
Wed, Jan. 22, 4:02 PM
- The Pimco Diversified Income Exchange Traded Fund (DI) will replicate a portfolio of global bonds with maturities between 3 to 8 years.
- The Pimco Low-Duration Exchange Traded Fund (LDUR) will feature a portfolio of investment-grade debt with duration of 1 to 3 years.
- Both funds will launch on January 23rd, almost 2 years after Pimco's first successful mutual fund replication, the Pimco Total Return ETF (BOND).
- Other intermediate term, total market ETFs: VCIT, CIU, ITR, PFIG, GVI
- Other short duration, total market ETFs: VCSH, CSJ, SCPB, BSV, BIV, HOLD, MINC, ISTB
Nov. 7, 2013, 1:28 PM
- Open for trade today is the ProShares Investment Grade Interest Rate Hedged ETF (IGHG) whose underlying index tries to achieve a duration of zero by offseting corporate debt holdings with a short position in Treasurys.
- ProShares this summer launched a similarly hedged fund, but one aimed at high yield, the ProShares HighYield Interest Rate Hedged ETF (HYHG).
- IG corporate bond ETFs: LQD, VCSH, VCIT, VCLT, CORP, CSJ, CIU, CFT, SCPB, LWC, CLY, ITR, QLTA, PFIG, IGS, SLQD, CBND, QLTB, IGU
Oct. 28, 2013, 3:38 PM
- Municipals (MUB) aren't just trading cheap relative to Treasurys (TLT), but also to corporates (LQD), argues JPMorgan.
- The observation isn't a huge surprise, but the team notes continued light supply of municipals as a supporting factor - there's been an average of $5.6B per week in issuance since rates turned higher in May vs. and average of $7.2B per week from January to April. It turns out the refinance market for local governments has slowed along side that of homeowners.
- JPMorgan doesn't expect a "sustained uptick" through the end of the year, but what about this fall's big drop in rates?
- Muni ETFs: MUB, SUB, MUNI, PVI, PZA, SHM, TFI, VRD, HYD, ITM, MLN, PRB, SMB, GMMB, SMMU, RVNU, NY.
- IG Corporate ETFs: LQD, CBND, CORP, FLTR, FLRN, ITR, LWC, SCPB, VCIT, VCLT, VCSH, IGU, IGS, CSJ, QLTA, QLTB, BSCI, BSCJ, BSCK, BSCL, BSCM.
Oct. 25, 2013, 4:44 AM
- Bristol-Myers Squibb (BMY) was among a number of highly rated issuers to sell a total of $12.7B of bonds yesterday as those raising debt took advantage of falling rates and strong demand.
- The pharmaceuticals company sold $1.5B in debt, Bank of Nova Scotia (BNS) $1.5B, railway operator Kansas City Southern (KSU) $450M, and the World Bank $6B - a record for the institution.
- Investment-grade firms have auctioned $21B in debt this week, while $884.3B of highly rated corporate bonds had been sold in 2013 through Wednesday. This year is on course to top the record $1.01T that was raised in 2012.
- ETFs: LQD, CBND, CORP, FLTR, FLRN, ITR, LWC, SCPB, VCIT, VCLT, VCSH, IGU, IGS, CSJ, QLTA, QLTB, BSCI, BSCJ, BSCK, BSCL, BSCM
Oct. 9, 2013, 9:59 AM
- The 0-5 Year High Yield Corporate Bond ETF (SHYG) - with expense ratio of 0.5% - will cherry-pick the shorter-duration picks of the High Yield Corporate Bond ETF (HYG).
- The 0-5 Year Investment Grade Corporate Bond ETF (SLQD) - with expense ratio of 0.15% - will hold the shorter-maturity paper of the Investment Grade Corporate Bond ETF (LQD).
- State Street has existing junk and IG short-duration ETFs, respectively the SJNK and SCPB.
- Other high-yield ETFs: JNK, PHB, HYLD, HYS, SJB, UJB, SJNK, ANGL, BSJG, BSJH, BSJI, QLTC, XOVR.
- Other IG ETFs: CBND, CORP, FLTR, FLRN, ITR, LWC, SCPB, VCIT, VCLT, VCSH, IGU, IGS, CSJ, QLTA, QLTB, BSCI, BSCJ, BSCK, BSCL, BSCM.
Sep. 30, 2013, 6:45 PM
- Buoyed by the largest corporate bond deal ever - Verizon's $49B sale - investment-grade companies sold more debt in September than any other month in the 18 years records have been kept - $145.7B - as companies scrambled to issue bonds before any further increase in rates made borrowing more expensive.
- Interest rates fell late in September after the Fed said it would keep stimulus in place, so companies' urgency to sell bonds before rates rise may not remain quite as strong; D.C. budget wrangling also could cause companies to hold off on new bond sales until the uncertainty clears.
- Still, if rates stay relatively low and investors continue to search for yield, new corporate bond sales could hum along at a solid pace.
- ETFs: LQD, CBND, CORP, FLTR, FLRN, ITR, LWC, SCPB, VCIT, VCLT, VCSH, IGU, IGS, CSJ, QLTA, QLTB, BSCI, BSCJ, BSCK, BSCL, BSCM.
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