Ten reasons that argue against an interest rate hike
For some time now, the ECB prime rate has been at a historic low, leaving investors in the fixed income sector with only a small return on many investments. Thus, both investors and borrowers are interested in the future development of interest rates. There are currently several reasons why it is unlikely that the ECB’s key interest rates will rise in the near future.
An insight to the seniority of corporate bond issues
Holding a corporate bond is a bit like holding an IOU (“I owe you” – it signifies an outstanding debt) from a trusted friend. At the time the money is handed over it seems inconceivable that anything could go wrong. However, if you have enough IOUs with enough friends, eventually one of them will struggle to repay their debt. It may only happen once every hundred IOUs you hold but when it does occur, where do you stand? In the line of people who are owed money, are you are the start of the line, or all the way at the back?
An insight into the maturity and duration of bonds
A bond is a security which can be purchased by private as well as institutional investors. A certain term (maturity term) is set and the bond has to be repaid once the bond matures. Interests are usually paid at regular intervals (quarterly, semi-annually or annually) during its maturity term. The extent of these interest payments are generally specified in advance, which is why bonds are also referred to as Fixed Income securities.
Report from Genève Invest on the Swiss economy and the removal of the EUR/CHF exchange rate floor
Amongst the most prestigious asset management companies in Europe, Genève Invest has released a financial and economic analysis which seeks to draw conclusions from 2015, the year that will probably go down in Swiss history as some kind of “year zero”. The decision to remove the exchange rate floor between the Euro and Swiss franc made by the Swiss National Bank in January 2015 put literally all of Switzerland’s crucial export sectors under enormous pressure.
Understanding a corporate bond’s prospectus
Corporate Bonds are an investment tool. Prospective investors interested in these securities have certain things they want to know about the bond related to the risk and return before investing. To help answer these questions, a corporate bond issuer will assemble a legal document known as a prospectus that should include everything an investor wants to know about the bond in order to make a wise decision.
Common errors when investing in corporate bonds
Learning from common investing errors is vital in order to become a successful corporate bond investor. There are numerous documented lessons we can learn from others’ mistakes. In the following you can find a short list of four of the more common corporate bond investing mistakes and how to remedy them:
An explanation of the various corporate bond yield types
It is imperative that a prospective investor has determined a definite target yield and, in combination with this, the risk/return profile should be performed, which establishes an awareness of investor risk limits. Having an understanding of the range of corporate bond yield forms and the various ways in which they are measured is evidently an important factor when establishing target return estimates for fixed income investments.