The Second Flight of a Black Swan

Jul 14, 2020

The North American economy has experienced a prolonged expansion since the last US contraction during the Great Financial Crisis (“GFC”). After more than 10 years of expansion, COVID-19 has tipped the credit and economic cycle into contraction. As the second time in the last 10 years that we’ve seen zero interest rate policies from central […]

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Covid-19 Killed The Risk Free Rate And Now My Underfunded Pension Needs PPE

May 20, 2020

In the shadow of a global pandemic with 20.5 million people sidelined at the end of April 2020, the U.S. Labor Department reported a record 14.7% jobless rate, the European Commission released projections of Europe’s worst recession in history, India’s unemployed topped 120 million and yet the S&P is close to all-time highs. Wow! Experience […]

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Pension Tension: Fears About Fallout

Feb 14, 2020

Extending is Pretending in 2020 Trying to extend the longest U.S. expansion in 150 years without much economic capacity left to go will be stressful. The global debt-to-GDP ratio recently hit an all-time high at 322%. Total global debt sits at US$253 trillion, according to a report released by the Institute of International Finance (IIF). […]

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Why Even Well-Managed Pension Funds Are Now In Trouble

Dec 27, 2019

Interest rates have been declining for nearly 40 years. There are many factors driving the current low interest rate environment: central banks trying to stimulate their economies and or stave off recession; muted inflation; weak global growth; protectionism; ongoing geopolitical uncertainty; aging populations; and the demand for traditional fixed income outstripping supply.

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Record Low Interest Rates?

Dec 27, 2019

After nine interest rate increases since December 2015, the US Federal Reserve lowered the rate for the first time in July this year, followed by another deduction in September. Both the long-term and short-term interest rates are now at an almost 5,000-year historical low

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Management Buyout (MBO)

Mar 27, 2019

What is a Management Buyout (MBO)? Management Buyout is a transaction where the management team is involved in the acquisition in part or all of the business they manage. Financing sources of an MBO transaction may be obtained from a combination of personal funds, bank loan, equity finance, seller finance, and mezzanine finance.

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Be Prepared!

Sep 6, 2018

Business owners today can take their strong balance sheets and earnings to senior banks or other capital providers to begin discussions on improving their borrowing terms. To be recession ready, ask for:

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Interest Rates Set to Spring as Valuations Look to Fall

Mar 6, 2018

Since February 3, 2018, when Jerome Powell succeeded Janet Yellen as the US Federal Reserve Chairman, the Fed has been poised to be more aggressive in raising interest rates from 3 to 4 times in 20181. We compare the Risk/Reward (Figure 1) benchmark curve (May 2005)2 against the 0% policy curve (Oct 2014) and the Current […]

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Middle Market Divergence Ahead

Dec 13, 2017

Looking Back: Institutional lenders have been adding money supply to the credit market, reducing interest rates on Middle Market loans Looking Around: The Upper Middle Market is benefitting the most from this borrower-friendly market. Looking Forward: The lower Middle Market may expect debt pricing to increase. Capital continues to flow into institutional leveraged loan funds, […]

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Sailing Through the Storm of Rising Interest Rates

Sep 13, 2017

We are moving away from an era of cheap capital. The US Federal Funds rate has increased by 25 Basis Points four times since December, 2015. The Bank of Canada overnight rate has had two hikes of 25 Basis Points in 2017.

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Unitranche : is it really worth it?

Mar 9, 2017

Unitranche Debt Definition | Investopedia Unitranche debt is a type of debt that combines senior and subordinated debt into one debt instrument; it is usually used to facilitate a leveraged buyout. The borrower would pay one interest rate to one lender, and the rate would usually fall between the rate for senior debt and subordinated […]

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Rising Corporate Debt: Unintended Consequences of Quantitative Easing

Jun 9, 2016

McKinsey Global Institute published a report focusing on the total debt oustanding pre- and post- 2008 financial crisis. Since the Great Recession, instead of de-risking and deleveraging globally, corporations have accrued more debt on their balance sheets and allowed their credit ratings to downgrade.  Bond Capital believes that rising debt is related to quantitative easing by central banks around […]

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Canadian High Yield Market

Sep 9, 2015

In prior articles, Bond Capital has used US high yield benchmarks as a proxy for riskier private debt, but what about in Canada? The yield on Canadian bonds continues to decline, and recent rate cuts by the Bank of Canada may cause them to stay low longer. Market speculation is that the US Federal Reserve […]

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High Yield Credit Spreads – A Trend Or A Blip?

Mar 9, 2015

High yield credit spreads are on the rise. Is this a trend or a blip? The current high yield index is still low when compared to the 15 year average of just under 10%. However, when looking at the 10 year decline in US bond yields over that same period, along with the recent uptick […]

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What’s Going On With Oil?! “V” Or “U” Recovery?

Jan 9, 2015

As active investors in Western Canada we cannot help but pay close attention to energy prices. Over the last four months, oil prices have come off significantly and many investors are still grappling with the impact this will have on the Western Canadian economy. Cheap oil would normally boost the US economy, but 30 year […]

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Canadian High Yield Bond Rates

May 9, 2014

Bond Capital’s seasonal credit commentary:  As an alternative investor who structures, arranges and funds subordinated debt, mezzanine capital and equity investments, we are keenly interested in the rate of return on capital.  Here, Bond Capital will compare the high yield bond market and the mid-market Canadian Bank debt market.  Due to the limited information available on Canadian high […]

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