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The real estate sector is currently facing headwinds. Some asset classes, such as offices, are impacted much more than others, but the impact is widespread. Despite this, real estate has not and will not lose its relevance in the foreseeable future. What is likely, however, is that the form or utilisation of the ‘space’ will change over time. Advancements in technology do not diminish the need for individuals to sleep, meet and interact. The intent is to optimize and reprioritize space in order to make life easier for us.
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EUR Collateralized Loan Obligations (CLOs) have emerged as a resilient asset class since their inception. This article delves into the historical performance, enhanced structural features, and comparative advantages of EUR IG CLOs, advocating for their essential role in providing diversification to a fixed-income portfolio.
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Our sector likes to stress the difference in terms of quality of loans, process, and many other factors. Just looking at the sheer growth of the private debt sector, the disintermediation becomes obvious. But how different is private credit really from traditional lending? How discerning has our sector been in differentiating the good from the bad?
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Specialist private debt provides a significantly differentiated, and perhaps more flexible, offering than bank debt. Whilst banks remain a sound option to provide credit, they have shifted their lending practices in a number of ways including a focus on a shrinking universe of relationship-based borrowers as well as a move to larger borrowers with debt which can be placed into the syndicated debt markets.
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In this article Shikha Gupta, PM of Astra Asset Management, shares her perspective on the risks of a severe real estate market correction, the outlook for the wider economy and the unique window of opportunity for long-term investors. In the near term, valuations are expected to sink lower, and it is evident in the market that this process has already begun.
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The size and diversity of corporate credit markets mean that there is no shortage of options for investors to express their ideas. In particular, the European bond market emerged from a quieter 2022 with the strongest first quarter since 2009, raising EUR 260bn of corporate debt; high yield issuance was up by more than 20% from Q1 2022.
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Until now, UK house prices had benefited from nearly three decades of decline in the risk free real interest rate. A 2019 working paper from the Bank of England predicted that “a 1% increase in real interest rates that was persistent could move real house prices by just under 20% across many years”.
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Dr. Christian Adler, Co-founder and Director, Astra Asset Management
The now infamous mini-budget announced by former Chancellor of the Exchequer Kwasi Kwarteng on 23rd September 2022 sent shockwaves in financial markets, as investors balked at the complete lack of funding details to support tax cuts.
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Albertus Rigter, Partner , Astra Asset Management
Investment Chief, Vincent Mortier brings up a really interesting point on hidden leverage in the financial system today. The recent volatility in Gilts and the Liability Driven Investments (LDI) caused margin calls for pension funds when gilts started falling in value. Away from the crisis at hand, the article talks about leverage in the private markets.
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Anish Mathur, Founder and Chief Investment Officer, Astra Asset Management
Since the global financial crisis upended the markets in 2007/8, there has been a singular commitment by central banks and governments, at least in the West, to prop up the economy by any means possible.
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With thanks to our friend Keith Pangretitsch at Relevance Wealth
The most recent market fluctuations have returned attention to tail risk managers. Mark Spitznagel, a Nassim Taleb prodigy, posted a 4,144% return in March. Nassim Taleb is the famous author of several books including Black Swan, Fooled by Randomness and Skin in the Game.
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We thought it would be interesting to issue our first blog with a question we received from an allocator. The question concerned how we compare the current crisis to the one in 2000 and 2008, and what data sources we use to construct our view on the cycle.