Perspectives Blog

Credit alternatives in government-backed debt

Columbia Management, Investment Team | June 23, 2014

One way investors may boost yields without taking on undue credit risk is through U.S. government agency debt. While many investors associate U.S. agency debt with very low yields, other types of agency debt can offer significant spreads to Treasuries with a modest decline in liquidity. We have been increasing our allocation to the agency market in core portfolios as a way to reduce credit risk while maintaining competitive yields. By Carl W….

The case for active muni management

Kimberly Campbell, Senior Portfolio Manager | April 21, 2014

…inefields. On the security selection level, portfolio managers analyze each security’s characteristics — issuer, credit quality, sector, coupon, yield, maturity, duration, call features — in addition to current market fundamentals and technicals, to determine which securities are most likely to outperform, or underperform. Credit analysts provide their independent, fundamental bottom-up credit research to determine whether a particular bond is a…

How will California’s drought affect water utility revenue bonds?

Ty Schoback, Senior Municipal Analyst | November 5, 2014

…revenue bonds in California to be sound investments, investors should be wary of rating volatility among certain credits that do not control their water supply or are unwilling to adequately raise rates to cover increasing costs. Independent and consistent municipal credit research We believe that the case for thorough, consistent and independent credit research is compelling. Columbia Management employs a team of 10 experienced municipal credit

The perils and pitfalls of buying individual municipal bonds

James Dearborn, Head of Municipal Bonds | February 27, 2014

…e same day! Worse yet for the individual investor, mutual funds and other institutional investors with dedicated credit research teams are constantly identifying and selling bonds with potential credit problems prior to rating agency downgrades. These securities are typically sold to unsuspecting retail investors who only become aware of the credit problems after the bonds are downgraded, which frequently results in negative price movement. Truly…

From tactical to core – The case for emerging market debt

Columbia Management, Investment Team | June 2, 2014

…ntals remain compelling and technical factors are more supportive. However, EMD has become less homogeneous at a credit level. Making the right country calls has never been more important as the status of EM country growth trends, balance of payments sustainability and overall economic resilience is significantly more divergent than it was five years ago. This divergence favors an investment manager who focuses on fundamental country and credit r…

How bad is China’s credit crisis?

Weili Jasmine Huang, Senior Portfolio Manager | February 3, 2014

…it guarantor). In recent years, China’s trust sector has been one of the fastest growing types of non-bank credit, or “shadow banking” credit, to circumvent the government’s bank loan quota system. Currently, overall trust assets are about Rmb 10 trillion (US$1.7 trillion), accounting for 7% of China total banking assets. It is estimated that 50% of trust loans relate to local government financial vehicles (LGFVs) and 20% to the…

Hungry for income? High yield munis could be your meal ticket

Chad Farrington, CFA, Head of Municipal Bond Credit Research and Senior Portfolio Manager | May 28, 2014

…an index. Past performance does not guarantee future results. Higher returns, higher risk — rely on professional research and diversification The high yield sector generally provides higher returns than the investment-grade space. With the higher returns comes greater risk and volatility, requiring greater emphasis on fundamental credit research, attention to individual credits and diversification across issuer, sector and geography. As such, we…