Investments

Two Harbors, a real estate investment trust, sold the bulk of its nonagency mortgage-backed securities portfolio to head off margin calls and refocus on its more favorable agency-MBS investments.

The amount of distressed debt in the U.S. has quadrupled in less than a week to nearly $1 trillion, reaching levels not seen since 2008 as the collapse of oil prices and fallout from the coronavirus shutters entire industries across the globe.

Dramatic Fed intervention may steady some markets, but unless something changes — and, judging by the last two weeks, it very well could — the central bank won’t be there to save fallen angels. Which brave investors will step up?

Red flags and warning signs from February should have prompted investors to make “all the wise decisions" at that time, says Ville Talasmaki of Finnish financial group Sampo Oyj.

One option could be issuing an announcement that makes clear regulators won’t likely object to risky funding arrangements that they’ve previously frowned upon, said the person who requested anonymity because the discussions might not lead to any actions.

The credit watch involves single-borrower securitizations of commercial mortgages for high-priced resorts in Florida and Hawaii.

Oaktree Capital Management LLC is planning a new distressed debt fund as recent credit market turmoil throws up investment opportunities.

While collapsing market prices do not present immediate worries for CLO managers, the prospect of future downgrades and defaults becomes more problematic.

A large percentage of Institutional investors lack confidence in the U.S. government’s ability to contain and eradicate the coronavirus outbreak. But few have plans to pull capital out of specific geographic regions due to the pandemic.

The lowest tier of investment-grade companies are growing vulnerable to downgrades to high-yield status - a designation that could drive up their borrowing costs and set off a wave of selling from investors who aren’t permitted to hold such low-quality debt.

Prices for major term loans issued by operators such as Marriott International, Hilton Worldwide and Caesars Entertainment have fallen in recent weeks as investors grow worried about the impact of the COVID-19 outbreak on global tourist and business travel.

Banks may be protected from a direct hit, but they have invested in vehicles that include such loans, potentially exposing them to defaults.

If JPMorgan, Credit Suisse and Macquarie Group aren’t able to find enough takers of bonds and loans funding El Dorado Resorts' acquisition of Caesar's Entertainment, they may have little choice but to offer the debt at a steep discount.

Asset manager PGIM Inc. is looking to at least triple its investments in the growing direct lending market where it wants to compete with banks to fund mid-size companies outside of the buyout space.

Ample access to cash and debt, along with strong diversification strategies built into investment portfolios, will help asset managers and junk-rated corporate borrowers absorb any near-term substantial economic headwinds, according to Fitch Ratings.

A low-rate environment has allowed companies in need of financing to avoid defaults or bankruptcy, making it difficult for credit managers to profit. At the same time, the broader market has provided far better investor returns over the past year, at least before the past week.

ALM 2020 includes a $1.375 billion Class A1 series of notes that have a three-month Libor spread of 108 basis points, well within the average primary AAA spread of 133 basis points over Libor.

An effort by the Federal Housing Finance Agency to examine membership rules for the Federal Home Loan Bank System is reigniting an argument over whether to allow more nonbanks in or impose tougher barriers.

A leading law firm in The Netherlands is mulling an appeal against the Dutch authorities’ decision to charge VAT on the management fees of collateralized loan obligations.

ABS investors who have previously needed only to know an asset was excluded from verboten classes like tobacco, oil and gas or firearms are now pressing for details on how well an investment stacks up in the social and governance factors.