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Credit articles

As sector developments are global, Robeco’s credit analysts have a sector responsibility irrespective of grade or country of origin. This is a unique approach, which allows us to capitalize on the inefficiencies resulting from current market segmentations.

Credits articles

High Yield

Volatility sticks to the script in September

13-10-2016 | Insight | Lukas Daalder

Markets wake up from summer slumber

Finding the best picks in high yield bonds

11-10-2016 | Insight | Sander Bus

The high yield bonds market offers a unique set of opportunities in an environment of low interest rates, but you need to know where to look, says portfolio manager Sander Bus.

The quarterly outlook for credits: I buy when you buy

06-10-2016 | Outlook | Sander Bus, Victor Verberk

Fundamentals have deteriorated and credit valuations are not very appealing either. But that does not matter anymore. There is only one trade and that is the Central Bank. Although we would rather be underweight risk, this very strong technical support keeps us neutrally positioned.

The debt supercycle also means growing wealth

26-09-2016 | Outlook | Lukas Daalder

Debt gets a bad rap, creating images of human figures bound in chains… but is it really that bad? It is a lot more complex than that, says asset allocator and debt investor Lukas Daalder in his analysis of the thorny subject for Robeco’s new five-year outlook.

Emerging Debt fund celebrates five years of outperformance

02-08-2016 | Insight | Paul Murray-John

A renaissance for emerging markets on the back of a weaker US dollar is proving a very happy birthday for Robeco’s Emerging Debt fund.

Lower liquidity, collective responsibility

28-07-2016 | Insight | Robbert Vonk

The financial industry needs to collectively deal with lower liquidity in bond markets, says Robeco’s head of risk analysis.

The quarterly outlook for credits: remortgaging shareholder equity

05-07-2016 | Outlook | Sander Bus, Victor Verberk

American companies are levering up and central banks are providing ever cheaper money. With increasing debt, markets are becoming more vulnerable to volatility. We pursue a guerrilla strategy, adopting a neutral starting point and taking tactical positions where value pops up due to excessive fear. We start with a higher beta driven by the Brexit spread premium.

Brexit impact on Robeco High Yield Bonds

24-06-2016 | Insight | Sander Bus

High-quality European issuers in the high-yield market opened 2 points down this morning after UK’s vote on Brexit. This price reaction is not severe, especially if you relate this to the fierce moves seen in equity markets. We considered the order of magnitude fair, given the strong support by the corporate buying program of the ECB and healthy balance sheet of European BB credits.

The quarterly outlook for credits: we are on borrowed time

04-04-2016 | Outlook | Sander Bus, Victor Verberk

How much further can the US business cycle be extended? After seven years of economic expansion, profitability and leverage, data suggest that the end of this cycle is nearing.

Opportunities for high yield bonds

15-03-2016 | Insight | Sander Bus

Present-day volatile markets offer opportunities for high yield bonds in sectors where we see a change in management behavior, e.g. in metals & mining and in financials.

Four unjustified stress factors for high yield bonds

14-03-2016 | Insight | Sander Bus

Investors in high yield bonds should be careful that they do not get carried away by the unpredictable sentiment on financial markets. Sander Bus, Robeco High Yield Bonds portfolio manager, puts this investment category into perspective and looks ahead. "There certainly are investment opportunities among high yield corporate bonds, but it remains important to be selective."

High yield remains our preferred risky asset

09-03-2016 | Insight | Lukas Daalder

February was a month with two faces. The first part of the month was terrible for risky assets. At a certain moment it felt like we were reliving the financial crisis of 2008.

Robeco High Yield Bonds: getting more than you pay for

02-03-2016 | Insight | Sander Bus

In the volatile high yield bond market Robeco High Yield Bonds’ investment process has to prove its strength. Morningstar is convinced it can. “Because of its stable and experienced management team, solid track record and low costs, this fund deserves Morningstar’s Silver rating.”

Keep your nerve in high yield!

11-02-2016 | Insight | Sander Bus

Keep your nerve – and you will be rewarded in high yield bonds. That’s the core message from portfolio manager Sander Bus as macroeconomic fears continue to wobble the market.

Beware the ‘self-fulfilling outcome’ of market sentiment

08-02-2016 | Monthly outlook | Lukas Daalder

Financial markets are in danger of creating a ‘self-fulfilling outcome’ that will send asset values even lower unless common sense breaks out, says Robeco’s Lukas Daalder.

Buying opportunities arise in volatile high yield market

27-01-2016 | Insight | Sander Bus

The turmoil in financial markets sparked by Chinese growth concerns and the associated decline in commodity prices is causing investors to worry about the high yield credit market.

Global economy: Down but not out

21-01-2016 | Outlook | Léon Cornelissen

“Things aren‘t going well, but apart from that everything’s fine.” According to Robeco board member Hester Borrie, this quote – from Gerard Reve’s book The Evenings – perfectly encapsulates chief economist Léon Cornelissen’s view on the situation in the global economy.

Thirteen things that could move markets in 2016

13-01-2016 | Outlook | Lukas Daalder

The annual predictions season officially kicked off the moment we tore the last page off our 2015 calendar. Anything from simply making future projections based on existing movements and trends to coming up with top-of-your-head ideas for ‘black swans’ – unexpected events that could have a major impact.

The three things spooking markets: rational or not?

11-01-2016 | Monthly outlook | Lukas Daalder

Equities are being rattled by three fears that are leading to an overreaction in markets, says Robeco’s Lukas Daalder.

The quarterly outlook for credits: zombies or creative destruction

22-12-2015 | Insight | Victor Verberk

Credit growth in China and Quantitative Easing (QE) in the US, Europe and Japan were medicines that worked for a while. Cheap money kept zombie businesses afloat and prevented creative destruction. However, the commodity cycle has rolled over and the credit cycle is proceeding. Funding pressure is increasing, the US credit market is full of animal spirits and volatility is back.

Credit analysis and ESG: a perfect fit

17-09-2014 | Insight | Jankees Ruizeveld, Taeke Wiersma

One of the cornerstones of the investment philosophy of Robeco’s Credit team is that avoiding losers is more important than picking every winner. The team believes that integrating environmental, social and corporate governance (ESG) factors into its analysis strengthens the ability to assess the downside risk of its credit investments. The Credit team is therefore convinced that ESG and credit analysis are a perfect fit.

ESG integration, in particular for corporate bonds

08-09-2014 | Insight | Edith Siermann

Institutional investors are becoming increasingly aware of the fact that trends such as population growth, the scarcity of raw materials and globalization have an impact on a company's risks and opportunities. Under the pressure of regulators and investors, such as participants in pension funds, sustainable investing is slowly but surely evolving from a 'niche' to a general trend.

The liquidity pitfall of passive investing

25-08-2014 | Insight | Patrick Houweling, PhD, Victor Verberk

Investing in ETFs can be very risky, especially during periods of limited liquidity. Patrick Houweling and Victor Verberk explain why and how active management and the use of derivatives can provide both a solution and an investment opportunity.

The impact of ESG on credit portfolios: the energy sector

09-05-2014 | Insight | Taeke Wiersma

Policy makers around the world are issuing regulations to reduce air pollution and climate change.

Quant investing in liquid high yield

24-04-2014 | Patrick Houweling, PhD

Robeco introduced Robeco Quant High Yield Fund on March 28, 2014. By investing in credit default swap (CDS) indices, this fund offers liquid exposure to global high yield, allowing investors to tactically trade in and out of this asset category at low costs. Performance is driven by a proprietary quantitative market-timing model with a solid track record of over ten years.

When a high yield can be too high – beware the triple-Cs

13-03-2014 | Insight | Sander Bus

The search for yield can come at a price if investors chase bigger returns without factoring in the extra risk involved, warns Robeco’s Sander Bus.

Lower-growth Europe ‘better for corporate bonds’

20-02-2014 | Insight | Sander Bus

Europe currently offers a better investing environment for corporate bonds compared with the US as companies are more conservatively managed on this side of the Atlantic, according to fund manager Sander Bus.

Making better credit risk assessments

06-01-2014 | Interview | Patrick Houweling, PhD

Ground-breaking research by Robeco that changed the way the riskiness of corporate bonds can be evaluated has celebrated its 10th anniversary. This riskiness needs to be carefully calculated as bonds issued by companies have a greater chance of defaulting than government bonds. Their returns can also be more volatile, as they are linked to the underlying performance of the company that issues the bond.

On the nature and predictability of corporate bond returns

16-05-2012 | Research | Daniël Haesen, CFA, Patrick Houweling, PhD

Corporate bond returns consist of two distinct components: an interest rate component, which is default-free and anti-cyclical, and a credit spread component, which is default-risky and pro-cyclical.

Managing high yield public small caps with Robeco’s corporate bond selection model COALA

01-12-2010 | Research | Daniël Haesen, CFA, Patrick Houweling, PhD, Sander Bus

Generating benchmark-like returns is a difficult job in the High Yield corporate bond market. High index turnover and illiquidity, i.e. high bid-ask spreads, are the main reasons why passively tracking a High Yield index comes at significant costs.

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