Sentences with phrase «debt investors risk»

Not exact matches

Like CDOs, CLOs buy up riskier debt, bundle those loans together, and then slice that debt up into bonds for investors with varying risk levels.

Although there may not be a bond bubble, with investors starved for yield, Gundlach predicts a potential bubble could form in credit risk as investors increase their leverage on riskier debt securities like junk bonds and emerging market debt.

So will investors taking counter-party risk via swaps and collateralized debt securities issued by a financial institution.

The sharp jump in debt yields in tandem was mirrored by a rally in commodity prices, which suggests that investors are becoming less worried about the risks of deflation.

«I think since, really, I'm a conservative investor, that experience of being in debt and also the experience of seeing things happen to people who took too much financial risk and got hurt, led me to be pretty conservative — I'm a guy that looks for singles and not home runs,» Bach said.

Many unsettling risks loom on the horizon — not least of which is a record amount of global debt — that could potentially spell trouble for the investor who hasn't adequately prepared with some allocation in a «safe haven.»

Debt securities rated below investment grade2 based on the issuer's weaker ability to pay interest and capital, resulting in the issuer paying a higher rate to entice investors to take on the added risk

As a result, it is now clear that the U.S. is in the latter stages of the multi-year credit cycle, a period when rising corporate leverage negatively affects returns to corporate debt as investors demand higher risk premiums to compensate for the greater volatility created by increased leverage.

Overall, this augurs for globally diverse fixed income exposures, including a preference for up - in - quality credit exposures and an allocation to emerging market debt for investors who can tolerate the added risk.

By taking on more risk as an equity investor, one can economically participate in a company's value creation activities providing an enhanced return profile relative to a company's debt offerings.

When liquidity is flowing, valuations don't matter as much, and the risk of default goes way down for venture debt investors.

This eliminates direct currency risk for US investors, but raises the possibility that a strengthening dollar or weakening local currency could make the debt harder to service, increasing credit risk.

Typically this conversion is at a discount to the next equity round (to compensate the debt investors for their risk) and sometimes carries warrants (same rational) or a cap on the equity price that the debt converts into.

Investors should monitor current events, as well as the ratio of national debt to gross domestic product, Treasury yields, credit ratings, and the weaknesses of the dollar for signs that default risk may be rising.

These are essentially being driven by the willingness of investors to buy risky debt without demanding any premium for the risk.

Even if income does not change by much, wealth can rise or fall because of changes in the attitude of investors toward risk, and declines in the value of collateral behind debt.

While bond credit ratings and relative yield can compensate an investor for the relative risk of companies to make good on their debts, the recent past has shown this is not always the case.

As do foreign investors in local currency debt that want exposure to domestic credit and interest rates, but not exchange rates, as well as other non-residents who are willing and able to take on exchange rate risk.

Key information about the specific mortgages was lost in the process of securitizing mortgages in the first place, and then later repackaging these mortgage securities into collateralized debt obligations (CDOs) and CDOs - squared.5 In addition, the complexity of the securities meant that it would be difficult to understand the risks even if an investor had access to all of the relevant mortgage - level information.

The risk in higher yielding junk bonds first and foremost is derived from fact that any company paying north of 5 % to issue debt has a high probability of never paying back the investors who by the debt.

With the S&P 500 within about 8 % of its highest level in history, with historically reliable valuation measures at obscene levels, implying near - zero 10 - 12 year S&P 500 nominal total returns; with an extended period of extreme overvalued, overbought, overbullish conditions replaced by deterioration in market internals that signal a clear shift toward risk - aversion among investors; with credit spreads on low - grade debt blowing out to multi-year highs; and with leading economic measures deteriorating rapidly, we continue to classify market conditions within the most hostile return / risk profile we identify — a classification that has been observed in only about 9 % of history.

Investors are «very happy to hold Canadian debt» because of limited default risk, said Matthew Strauss, senior currency strategist at RBC in Toronto.

As I've cited the problem I see for investors is the risk of not pricing and for entrepreneurs «convertible debt with a cap» gives them a maximum price but not a minimum.

As long as investors aren't too concerned about the risk of capital losses - that is, as long as investors are in a risk - seeking mood (Iron Law of Speculation), a mountain of zero - interest hot potatoes will also embolden investors to chase yield further out on the risk spectrum, for example, in junk debt, stocks and mortgage securities.

If you'll recall, the root cause of the collapse a decade ago was the market realization that all this debt that was being sold to investors as high yield and low risk was suddenly reevaluated.

They bought enormous amounts of mortgages and other debt instruments, and they drove down interest rates to virtually zero to ensure that the large investment banks and financial institutions survived — forcing retail investors to participate in high - risk securities such as equities and corporate debt instead of stashing their money in banks.

Investor demand for emerging market (EM) debt has been strong lately, as the near - term risk of trade wars has faded and income seekers have flocked to the asset class» higher yields.

With interest rates on low - risk investments falling to low levels in many countries, investors have sought to maintain yields by moving into higher - risk assets such as corporate debt and emerging market debt.

Potential risks and uncertainties include the availability of acceptable bank debt financing; the availability of acceptable additional equity investors; delays or interruptions in construction of power plants; the timely availability of required permits and authorizations for projects from governmental entities and third parties; changes in applicable regulatory requirements and incentives for production of solar power; and other risks described in the company's filings with the Securities and Exchange Commission.

The investor should note that vehicles that invest in lower - rated debt securities (commonly referred to as junk bonds) involve additional risks because of the lower credit quality of the securities in the portfolio.

Analysts and investors generally use the debt - to - income ratio of a company to evaluate how much risk the company has taken on — and how risky it would be to invest in the company.

At present, investors have no reasonable incentive at all to «lock in» the prospective returns implied by current prices of stocks or long - term bonds (though we suspect that 10 - year Treasuries may benefit over a short horizon due to continued economic risks and still - unresolved debt concerns in Europe, which has already entered an economic downturn).

This may surprise some given the recent default announcement of Puerto Rican debt, which is a vivid reminder of why it's important for investors to be completely aware of what they own and the risk they take in search of yield.

Alternative investments, such as hedge funds, private equity / private debt and private real estate funds, are speculative and involve a high degree of risk that is suitable only for those investors who have the financial sophistication and expertise to evaluate the merits and risks of an investment in a fund and for which the fund does not represent a complete investment program.

A rise in interest rates — in part related to tax cuts which will stimulate the economy and require the government to issue more debt — caused many investors to revalue their stock holdings (equities are often valued in part based on their expected returns versus a risk - free Treasury).

It will enable you to attract traditional investment and debt financing to scale business activities, and will make it possible to distribute any required profits to investors and lenders in exchange for the risk they are taking.

When investor preferences are risk - seeking, overly loose monetary policy can have a disastrous effect by promoting reckless speculation and enhancing the ability of low - quality borrowers to issue debt to yield - starved investors.

Because risk - seeking investors tend to be indiscriminate about it, we find that the best measure of risk - seeking is the uniformity of market internals across a broad range of individual stocks, industries, sectors, and security types, including debt securities of varying creditworthiness.

-LSB-...] away — USA Today Debt Risk Shifting to Investors as Bank Regulations Bite — Bloomberg Do We Need a Recession for a Meaningful Correction in Stocks?

«Many investors are looking for exposure to emerging markets, but do not have the risk appetite for emerging market equities or emerging market local - currency debt,» said Fijalkowski.

Investors are compensated for assuming credit risk by way of interest payments from the borrower or issuer of a debt obligation.

These low rates have encouraged investors in recent months to pile on risk, taking U.S. equities markets to record highs earlier this year despite an economy that's still being slowed by relatively high unemployment, huge debt levels, and tighter government spending.

The Financial Repression Authority (FRA) educates investors, funds and retirees on the adverse risks resulting from good - intentioned macroprudential central bank and government policies and regulations focused on controlling excessive government debt, attempting to stimulate economic growth, and minimizing the potential for financial and economic crises.

Today we are going to cover a) What is the risk of investing in debt instruments b) What feasible options are available to retail investors to invest in debt instruments There are few risks which we should be aware of 1.

Despite the fact that the business doesn't really have any additional risk — the product, remember, can be returned to the vendor if it is not sold — some investors and analysts treat this debt as an obligation that could threaten liquidity!

Most loans have been acquired for debt consolidation purposes and have a risk of rising interest rates, which could adversely affect investors and borrowers alike

Ignore the Margin Debt Alarm The margin debt alarm has seemingly been sounded every few months when investors realize absolute levels of margin debt has reached new all - time highs (inferring that risk taking has too reached all - time high levels and stocks are at riDebt Alarm The margin debt alarm has seemingly been sounded every few months when investors realize absolute levels of margin debt has reached new all - time highs (inferring that risk taking has too reached all - time high levels and stocks are at ridebt alarm has seemingly been sounded every few months when investors realize absolute levels of margin debt has reached new all - time highs (inferring that risk taking has too reached all - time high levels and stocks are at ridebt has reached new all - time highs (inferring that risk taking has too reached all - time high levels and stocks are at risk).

Reflecting the ongoing improvement in investor sentiment and appetite for risk in global debt markets, corporate spreads have continued to fall over recent months.

This expansion in debt will force all rates higher as investors seek to be compensated for the increased risk of owning government debt.

That means that when your debts come due and you need new loans to pay off the old ones, investors start demanding that you compensate them for their risks in the form of higher interest rates.