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Default and LME (liability management exercises) activity began 2025 on a quieter note, recording the lowest default and distressed exchange volume for a calendar month since December 2022. However, December saw elevated activity, and three- and six-month rolling totals remain high. We expect a slight moderation in high-yield bond and leveraged loan defaults in 2025,
Default Activity Eases in Early 2025 Read More »
The rise of Liability Management Exercises (LMEs) among high-yield issuers has primarily been driven by covenant-lite structures. These conditions allow managers reallocate assets, modify terms, and exchange instruments, also leading to a large increase of “distressed exchanges” (where troubled issuers offer bondholders reduced-value securities for existing bonds). This helps ease financial distress and avoiding an
High Yield Bond Recoveries in the Era of Covenant Lite Read More »
The US economy showed resilience, with 2.8% GDP growth driven by robust consumer spending and AI investments, despite vulnerabilities from subdued business and government expenditures. Donald Trump’s presidential victory prompted market shifts, driving gains in US small- and mid-cap equities on deregulation expectations, while tariff policies amplified global stagflation risks, particularly in trade-dependent regions. US
Q1 2025 – Quarterly Investment Letter Read More »
Discover how hedge funds navigated through the year. The Alpinum Hedge Fund Insight contains a brief review of the hedge fund highlights of the year 2024. The Focus Topic sheds light on Asia. In our opinion, it currently offers considerable opportunities. Finally, we venture an outlook and explain which hedge fund strategies could benefit most
Hedge Funds Review & Outlook 12/2024 Read More »
Year to date, the US leveraged debt market posted strong performance, with returns of 8.3% in the leveraged loan (syndicated bank loans) segment and 8.7% in high yield bonds. In contrast to previous years, the short-term maturity profile of the leveraged loan market is heavily weighted toward lower-rated issuers (single B’s/CCC’s) compared to the high
Strong Performance and Outlook for US Leveraged Loans Read More »
Leveraged loans delivered one of the strongest gains of the year during October, outperforming the high yield market by 1.45%. The month was marked by heavy CLO issuance, robust primary market activity, and substantial fund and ETF inflows. A sectoral breakdown reveals that telecommunications was the only positive performer in the high yield market, whereas
Strength of US Leveraged Loans evident in October Read More »
U.S. homeowners’ equity has reached a historic high, with $ 35 trilion, serving as a substantial financial backstop for the economy in the event of a recession. In such a scenario, homeowners have the option to refinance their mortgages and tap into this equity as a financial cushion (vs. U.S. GDP value of $ 27
U.S. home owners’ equity serves as backstop for economy Read More »
A weaker US labour market causes downward pressure on wage growth, which softens private consumption and dampens the econom-ic outlook. Inflation moderated in the US and Europe. In August, disappointing US jobs figures and tightening measures from the Bank of Japan triggered sharp market reactions, with the VIX rising to its highest level since COVID-19.
Q4 2024 – Quarterly Investment Letter Read More »
Historically, bank spreads have typically traded wider than those in the broader corporate market. However, this gap has almost disappeared, driven by the positive dynamics and performance within the banking sector since the European Central Bank started the hiking rate cycle in 2022. EUR IG Sr Financial spreads (see blue line in graph) are now
Banking sector reflects credit quality improvements Read More »
The global economy has to deal with higher structural inflation forces driven by aspects such as geopolitics (i.e. new tariffs, near-/on-shoring), energy transition, demographics or elevated fiscal spending. However, over the next 12 months, the US inflation could tame somewhat towards 2.5% as service inflation is expected to cool. This current disinflation trend is expected
Service inflation in the U.S. is cooling down Read More »
