SOVEREIGN DEBT RESTRUCTURING | MASTERCLASS

A deep dive masterclass on sovereign debt restructuring, to be conducted virtually by Asian high yield bond expert Florian Schmidt.

30 June 2022 (Thu), 5pm Singapore/HK time

Strong appetite for fallen angel bonds – bonds of issuers that have recently been downgraded to junk from investment grade – have led to solid inflows in the iShares FALN ETF in the new year. Record weekly inflows of $478mn, followed by another $93mn have boosted FALN’s total assets to over $1bn now. Strong demand on the back of stimulus from the Fed led the ETF to rise 7.75% in 2020 in price terms ex-coupon and a massive 41.6% since late March last year when fears regarding the pandemic led to a sharp sell-off. FALN’s single largest bond holding (2.21%), Carnival’s 11.5% bond due 2023 has rallied over 15% since issuance at 99 in early April 2020 to now trade at 114. Sameer Samana, senior global market strategist at Wells Fargo Investment Institute said, “The whole script flipped in early November. Investors are betting that a re-opening of the global economy, along with the reflationary trends that we’re seeing, will lead to spread tightening and credit rating upgrades.”

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