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

US High Yield (HY) and Investment Grade (IG) funds have seen sharp bouts of outflows in recent times with the massive volatility in bond markets. EPFR data shows that for the week ended Jun 15, US HY funds witnessed $6.6bn in outflows, the highest since March 2020 with the YTD outflows at about $35bn. On the other hand, US IG funds saw $2.1bn in outflows, the highest weekly outflows since April 2021. FT notes that high inflation data has triggered fund managers to revaluate previous assumptions with some investors also having fears about a US economy recession. John McClain, a PM at Brandywine Investment Management said, “Central banks don’t have the antidote for this market. Hiking rates will slow the economy, but it won’t stop the war in Ukraine and it won’t alleviate supply chains”. As per Ice Data Services, currently, around $100bn of junk bonds trade at a spread of more than 1000bps over US Treasury yields, which they note is an indication of the distress and risk involved in lending to these companies.

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