Losses on Italian Non-Performing Loans: Severity and Solutions
|
|
- Alisha Hoover
- 5 years ago
- Views:
Transcription
1 VIEWPOINT July 2016 Losses on Italian Non-Performing Loans: Severity and Solutions Losses look manageable over time, but a prompt solution now seems likely AUTHOR Joshua Anderson, CFA Managing Director Portfolio Manager Italian banks hold a large amount of debt that is at or near default, and many investors are alarmed. Yet at current levels, we believe the Italian non-performing loan (NPL) problem could be managed over time through a combination of earnings growth and collateral recovery. However, with market uncertainty spiking post-brexit, policymakers now feel pressured to pursue a quicker resolution. Under the current framework of the European Union Bank Recovery and Resolution Directive (BBRD), a bail-in would impose costs on investors, including the Italian taxpayers who represent a significant portion of them. Consequently, while acknowledging the difficulties of this under BBRD, we think that one option to consider is the Italian government buying the NPLs. It could be funded at the government borrowing rate, and based on current prices and potential recoveries, could potentially be profitable for taxpayers in the long run. This can be thought of as a form of government investment rather than state aid. Given the fluidity of the situation, we ultimately expect some combination of the various resolution options to be employed, consistent with the BBRD framework.
2 2 July 2016 Viewpoint HOW BIG IS THE CURRENT PROBLEM? Non-performing loans vs. non-performing exposures A lot of uncertainty right now stems from clarifying the size of the problem. The worstperforming loans in Italy are known as sofferenze, which can be broadly translated as very bad debt. It refers to those loans that have already defaulted. It is this category, which is currently 87 billion on a net basis, that the banks and government consider the stock of NPLs. Many regulators and market participants, however, prefer to look at non-performing exposures (NPEs). As well as the stock of NPLs, this includes loans unlikely to pay in the future, or that are currently past due, but are not yet bad enough to classify as NPLs. While transparency around loan performance could be improved, our understanding is that loans over 120 days past due are classified as NPEs at a minimum. The question for investors and the reason for much uncertainty today is whether NPEs are actually NPLs, and whether the banking sector s exposure is closer to 87 billion or 197 billion? Markets and regulators appear to be saying yes, while banks and governments are saying no. From our perspective, we think the 197 billion of net NPEs is the best place to start. Of this, around 60% is concentrated in five banks (see Figure 1). Looking ahead, it s possible that loan quality could deteriorate further. One positive sign is that the growth of NPLs has slowed markedly (see Figure 2), suggesting some level of burnout consistent with historical norms. However, this could change if macroeconomic conditions weaken; the challenge for investors is knowing where we are in the credit cycle. Using transition rates (the portion of performing loans converting to non-performing loans) from before the financial crisis paints a very benign picture of future exposure, while using recent rates paints a more challenging one. WHAT DOES THIS MEAN FOR THE BANKING SYSTEM? System-wide losses on NPLs look manageable over time In our view, the weakest banks in Italy will likely need to raise capital in the short term - a process that is well underway. However, assuming the situation doesn t significantly deteriorate, the NPL exposure looks manageable for the banking system in aggregate over time, for three reasons: Expected earnings: Systemwide pre-provision earnings (PPE) 2 are currently ~ 30 billion per annum. At this level, banks can write down half of all their current net NPEs to zero, with zero recovery, over the next three years, with limited impact Figure 1: NPL and NPE exposures in Italy in ( bn) ITALY INTESA UNICREDIT MONTE BPIM/MILANO UBI Tangible equity na Total loans 1, Gross NPE NET NPE Gross NPE ratio % 18% 16% 15% 34% 22% 15% NPE coverage ratio % 46% 47% 52% 49% 35% 28% Gross NPL NET NPL Gross NPL ratio % 11% 10% 10% 20% 12% 8% NPL coverage ratio % 59% 61% 61% 63% 46% 39% 2015 pre-povisions income ~ Source: PIMCO, Company Reports, Bank of Italy Financial Stability Report as of 30 June 2016
3 July 2016 Viewpoint 3 Figure 2: Net inflows of gross NPL as percentage of loans Net inflows of gross NPL as % of Loans Percentage Average of stronger banks Average inflows Average of weaker banks Source: KBW, company reports as of 30 May 2016 on capital levels. However, the key assumptions are that Italy avoids a significant recession, and current earnings are sustainable. The policy objective of making the system recession proof today, means that earnings are being given minimal, if any, credit by market participants right now. Collateral recoveries: Data is not easily available, but a Moody s report published in 2014 estimates loss severities of 40% on secured NPLs and 80% on unsecured NPLs. According to a PwC report from June 2016, 53% of gross Italian NPL is secured, suggesting the amount of net NPL is largely covered by real estate collateral. 3 In addition, a certain portion of the loans have personal guarantees, which could provide higher collateral recovery over time. While it is difficult to assess this number accurately, PwC estimates that 19% of the NPLs are retail loans. Acknowledging that the better loans are probably securitized, and that there are idiosyncrasies in Italy that may make recoveries harder than in countries such as Spain and Ireland (for example, the long resolution process through the courts, which on average can take six to seven years), these numbers suggest that the current marks are reasonable over the long term. Strategic defaulting: Although this is extremely hard to quantify, our research suggests that strategic defaulting where a borrower temporarily chooses not to pay, but can ultimately do so is prevalent across Italy. This is due to the time it takes to foreclose on a loan, which is often greater than five years. If strategic defaulting is prevalent it means that end losses to banks will be less than the current NPE number implies. As such we think providing greater transparency on the extent of strategic defaulting would go a long way toward improving market confidence. In addition, adopting a zero tolerance policy towards strategic defaulting in the first place, in combination with shortening foreclosure times, could help maximize collateral recovery. ARE CURRENT MARKET PRICES FOR THE NON-PERFORMING LOANS FAIR? Concerns on mispricing look overstated A key concern for investors is that the NPE and NPLs are mismarked on bank balance sheets, meaning that banks should be writing down higher exposures than they are currently doing. In our view this is debatable. As argued above, if the NPEs are held to maturity, we think that the banking system is adequately covered in aggregate, when considering collateral, guarantees and strategic defaulting.
4 4 July 2016 Viewpoint However, it s also fair to say that if the NPLs were sold under current market conditions, there would likely be a 10 to 20 percentage point difference between where investors would bid to buy the loans and where they have most recently been valued. (For example, an NPL currently valued by a bank at 40 cents would command between 20 and 30 cents if sold in the market today.) To sell all the current NPLs in the system at these market prices would lead to a capital depletion of around 40 billion. Although this seems large, it equates to just over one year of system-wide PPE. To be clear, this is a system-wide number and doesn t negate the need for the weaker banks to potentially raise capital. DIFFERENCES BETWEEN BID AND BOOK VALUES ARE DRIVEN BY FUNDING RATES, ASSET VALUE AND EXPENSE ASSUMPTIONS This difference between the bid (the amount people are willing to buy for in the market) and the book value (the level at which banks currently hold the loans) is driven by the following factors: Funding (discount) rates: The liability structure of the bank selling the NPLs is likely more efficient than the potential purchaser of the NPLs. For example, the cost of funding for banks, based on figures from the Italian Banking Association, is 1.08%, including deposits and retail bonds. A potential bidder, such as a hedge fund or private equity firm, will be challenged to get those funding rates. Given that Italian NPLs are a longer-duration asset, these funding differentials can be meaningful. The new GAC program (Garanzia Cartolarizzazione Sofferenze, or NPL Securitization Guarantee) should narrow the bid-offer by several points, but likely doesn t lower the funding costs enough to justify paying substantially higher for the NPLs. Asset value assumptions: Residual asset value assumptions (how much of the loan will ultimately be recovered) can differ significantly depending on the investor type, given differences in assumptions about Italian macroeconomic dynamics, the recoverability of collateral and liquidation timelines. Expense assumptions: Most banks expense the servicing/ workout cost of NPLs when the expense occurs (the high level of NPLs is one of the reasons Italian banks have higher expense ratios). However, the NPL purchaser discounts these expenses at the purchase discount rate. This again leads to the purchaser seeking a lower price. Given these differences, Italian banks look to be rational in holding on to their nonperforming loans. It s also important to note that most banks would be challenged to sell their illiquid assets at current marks. WHAT CAN BE DONE TO RESOLVE THE PROBLEM? There are three main options for reducing NPLs across the Italian banking sector, all of which have their pros and cons. Bail-in: The BRRD framework provides for recapitalization of banks, but imposes burden sharing on investors, or impairment of the bank s liabilities. Conceptually, the positives of this approach are that it would clean up the system quickly, facilitate lending to the wider economy and provide better protection should another recession occur. However, there could also be negative consequences, including the potential of triggering a wider systemic shock. As we ve cautioned before, this could prove counter-cyclical, raising the cost of equity and borrowing on weaker sovereigns and lower income borrowers. It would also impose an immediate cost on Italian retail investors, who constitute around 50% of subordinated debt holders. Muddle through: An alternative option would be for the sector to muddle through, addressing the weakest lenders as needed, and using earnings to write down exposures over time. This mitigates the risk of a systemic shock and means that investors do not need to take immediate losses and taxpayers do not need to provide a subsidy. However, the NPLs remain as an overhang in the system, limiting
5 July 2016 Viewpoint 5 lending and future flexibility in the event of a recession. That said, thus far, there is limited evidence that recapitalizing banks has led to extensive lending particularly to those most in need. Recapitalization using lowcost funding: A final option, albeit one that is significantly harder post-bbrd, is to remove the NPLs from bank balance sheets using low-cost funding. As with a bail-in, the pros of this approach are that it cleans up the system quickly and facilitates future lending albeit with the cost potentially borne by taxpayers, not investors. Although this may seem unpalatable, we think it potentially could be positive for taxpayers: Given low funding costs, if the government were to purchase secured NPLs, a taxpayer could potentially earn in excess of a double-digit return on select secured loans purchased at current book value, assuming a 60% loan-to-cost funding at the government funding rates. Said another way, our analysis shows that the price of an unlevered secured pool, trading with an expected IRR in the low to mid-teens range, could potentially be improved by 10 to 20 percentage points, with 1% funding at a 60% loanto-cost ratio. Conceptually, this is not too dissimilar from governments investing in other assets, be it infrastructure funds or private companies. One key advantage is that it allows taxpayers, rather than private investors, to benefit if the economy recovers. It can therefore be thought of as a form of government investment rather than state aid. Overall, the Italian NPL problem is a manageable one that could be addressed with a muddle-through approach. Before the Brexit vote, this was arguably the best solution. However, the uncertainty following Brexit, and concerns about contagion risk, mean that a quicker resolution is now required. While acknowledging that this is challenging under the current BBRD framework, we think that over time the system should differentiate between bail-ins, where investors take losses, and funded solutions that could be potentially profitable for the taxpayer in the long run. In the case of Italy, where the investors are also the taxpayers, the latter could be a potentially elegant way of resolving the problem. It would not impose immediate losses on Italian retail bond investors and would preserve the option of limiting or eliminating potential tax payer losses over time. Given the fluidity of the situation, we ultimately expect some combination of the various options to be employed, consistent with the BRRD framework. 1 Net loan value is the gross value of loans minus provisions already set aside for defaults 2 Earnings before provisions for future loan defaults are taken into account 3 The Italian NPL Market: The NPL Volcano is Ready To Erupt, PwC, June 2016
6 All investments contain risk and may lose value. There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. Investors should consult their investment professional prior to making an investment decision. This material contains the opinions of the author but not necessarily those of PIMCO and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. It is not possible to invest directly in an unmanaged index. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. PIMCO provides services only to qualified institutions and investors. This is not an offer to any person in any jurisdiction where unlawful or unauthorized. Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA is regulated by the United States Securities and Exchange Commission. PIMCO Europe Ltd (Company No ), PIMCO Europe, Ltd Amsterdam Branch (Company No ), and PIMCO Europe Ltd - Italy (Company No ) are authorised and regulated by the Financial Conduct Authority (25 The North Colonnade, Canary Wharf, London E14 5HS) in the U.K. The Amsterdam and Italy branches are additionally regulated by the AFM and CONSOB in accordance with Article 27 of the Italian Consolidated Financial Act, respectively. PIMCO Europe Ltd services and products are available only to professional clients as defined in the Financial Conduct Authority s Handbook and are not available to individual investors, who should not rely on this communication. PIMCO Deutschland GmbH (Company No , Seidlstr a, Munich, Germany) is authorised and regulated by the German Federal Financial Supervisory Authority (BaFin) (Marie-Curie-Str , Frankfurt am Main) in Germany in accordance with Section 32 of the German Banking Act (KWG). The services and products provided by PIMCO Deutschland GmbH are available only to professional clients as defined in Section 31a para. 2 German Securities Trading Act (WpHG). They are not available to individual investors, who should not rely on this communication. PIMCO (Schweiz) GmbH (registered in Switzerland, Company No. CH ), Brandschenkestrasse 41, 8002 Zurich, Switzerland, Tel: The services and products provided by PIMCO Switzerland GmbH are not available to individual investors, who should not rely on this communication but contact their financial adviser. PIMCO Asia Pte Ltd (501 Orchard Road #09-03, Wheelock Place, Singapore , Registration No K) is regulated by the Monetary Authority of Singapore as a holder of a capital markets services licence and an exempt financial adviser. The asset management services and investment products are not available to persons where provision of such services and products is unauthorised. PIMCO Asia Limited (Suite 2201, 22nd Floor, Two International Finance Centre, No. 8 Finance Street, Central, Hong Kong) is licensed by the Securities and Futures Commission for Types 1, 4 and 9 regulated activities under the Securities and Futures Ordinance. The asset management services and investment products are not available to persons where provision of such services and products is unauthorised. PIMCO Australia Pty Ltd ABN , AFSL (PIMCO Australia) offers products and services to both wholesale and retail clients as defined in the Corporations Act 2001 (limited to general financial product advice in the case of retail clients). This communication is provided for general information only without taking into account the objectives, financial situation or needs of any particular investors. PIMCO Japan Ltd (Toranomon Towers Office 18F, , Toranomon, Minato-ku, Tokyo, Japan ) Financial Instruments Business Registration Number is Director of Kanto Local Finance Bureau (Financial Instruments Firm) No PIMCO Japan Ltd is a member of Japan Investment Advisers Association and The Investment Trusts Association, Japan. Investment management products and services offered by PIMCO Japan Ltd are offered only to persons within its respective jurisdiction, and are not available to persons where provision of such products or services is unauthorized. Valuations of assets will fluctuate based upon prices of securities and values of derivative transactions in the portfolio, market conditions, interest rates and credit risk, among others. Investments in foreign currency denominated assets will be affected by foreign exchange rates. There is no guarantee that the principal amount of the investment will be preserved, or that a certain return will be realized; the investment could suffer a loss. All profits and losses incur to the investor. The amounts, maximum amounts and calculation methodologies of each type of fee and expense and their total amounts will vary depending on the investment strategy, the status of investment performance, period of management and outstanding balance of assets and thus such fees and expenses cannot be set forth herein. PIMCO Canada Corp. (199 Bay Street, Suite 2050, Commerce Court Station, P.O. Box 363, Toronto, ON, M5L 1G2) services and products may only be available in certain provinces or territories of Canada and only through dealers authorized for that purpose. PIMCO Latin America Edifício Internacional Rio Praia do Flamengo, 154 1o andar, Rio de Janeiro RJ Brasil No part of this publication may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. 2016, PIMCO. Newport Beach Headquarters 650 Newport Center Drive Newport Beach, CA Amsterdam Hong Kong London Milan Munich New York Rio de Janeiro Singapore Sydney Tokyo Toronto Zurich pimco.com blog.pimco.com 45939
Defined Contribution Consulting Support and Trends Survey
PIMCO s 12 th Annual Defined Contribution Consulting Support and Trends Survey For institutional investor use only Survey overview PIMCO s DC Practice has prepared the 12th annual Defined Contribution
More informationLiquidity Markets Likely to Evolve Under Proposed Money Market Reforms
Viewpoint June 2013 Your Global Investment Authority Liquidity Markets Likely to Evolve Under Proposed Money Market Reforms The Securities and Exchange Commission on Wednesday voted unanimously to propose
More informationPIMCO Research Affiliates Equity (RAE) Fundamental
PIMCO Research Affiliates Equity (RAE) Fundamental Seek to get more from your equity allocation with a systematic strategy that is designed to capture the key benefits of a passive equity approach, with
More informationWhy the Bond Market Is Yielding Negative and What Negative Yields Mean for You
Viewpoint February 2015 Your Global Investment Authority Why the Bond Market Is Yielding Negative and What Negative Yields Mean for You Negative yields on bonds are no longer unicorns. In Switzerland,
More informationCommercial Mortgage-Backed Securities: Approaching the Later Innings of a Recovery
Viewpoint February 2015 Your Global Investment Authority Commercial Mortgage-Backed Securities: Approaching the Later Innings of a Recovery U.S. commercial real estate (CRE) prices reached an important
More informationA Look at Rising Household Debt in Australia and the Implications for Policy
Viewpoint June 15 Your Global Investment Authority A Look at Rising Household Debt in Australia and the Implications for Policy Australia s economy is giving off mixed signals: Even as GDP growth and income
More informationCommodities Remain a Valuable Portfolio Allocation
Featured Solution August 2015 Your Global Investment Authority Commodities Remain a Valuable Portfolio Allocation Investors typically look to a commodities allocation to provide three key benefits to their
More informationWith Inflation Set to Rise, a Fresh Look at Active TIPS Strategies
FEATURED SOLUTION February 2017 With Inflation Set to Rise, a Fresh Look at Active TIPS Strategies AUTHORS Mihir Worah CIO Asset Allocation and Real Return Jeremie Banet Executive Vice President Portfolio
More informationDemystifying Gold Prices
Viewpoint January 2014 Your Global Investment Authority Demystifying Gold Prices What is it about gold prices? Many people seem to believe they are impossible to predict, or even understand. At her Senate
More informationNavigating Divergent Global ILB Markets: Why Are UK Index-Linked Gilts Persistently Overvalued?
Viewpoint September 2015 Your Global Investment Authority Navigating Divergent Global ILB Markets: Why Are UK Index-Linked Gilts Persistently Overvalued? Mihir P. Worah CIO Asset Allocation and Real Return
More informationLies, Damned Lies and Equity Skew
Featured Solution June 2015 Your Global Investment Authority Lies, Damned Lies and Equity Skew Equity skew, which at its most basic purports to measure the difference in the value of stock options with
More informationU.S. Housing: Investors Reach for Higher-Hanging Fruit
Viewpoint February 214 Your Global Investment Authority U.S. Housing: Investors Reach for Higher-Hanging Fruit Home prices have risen rapidly as real estate and mortgage investors picked the housing market
More informationStreamlining Glide Path Implementation With an LDI Completion Manager
In Depth July 2013 Your Global Investment Authority Streamlining Glide Path Implementation With an LDI Completion Manager Rene Martel, FSA, CFA Executive Vice President Product Manager Pension plan sponsors
More informationLeaving Money on the Table? Don t Invest in Credit Passively
GLOBAL CREDIT PERSPECTIVES May 2017 Leaving Money on the Table? Don t Invest in Credit Passively AUTHORS Mark R. Kiesel Chief Investment Officer Global Credit Anna Dragesic Executive Vice President Credit
More informationEfficient Pension Investing
Featured Solutions June 2013 Your Global Investment Authority Efficient Pension Investing Oh Lord, help me to be pure. But not yet! St. Augustine Defining purity for a pension strategy is a tricky thing.
More informationGlobal Divergence, the Federal Reserve and the Impact on U.S. Insurers
Viewpoint April 2015 Your Global Investment Authority Global Divergence, the Federal Reserve and the Impact on U.S. Insurers Insurance publication SNL Financial recently sat down with members of PIMCO
More informationCommodity Investing: A New Take on Equities
IN DEPTH July 2016 Commodity Investing: A New Take on Equities Versus Futures AUTHORS Nicholas J. Johnson Managing Director Portfolio Manager Klaus Thuerbach Vice President Product Manager After the challenges
More informationCan Liquidity Explain the Recent Fall in Breakeven Inflation?
QUANTITATIVE RESEARCH March 2016 Can Liquidity Explain the Recent Fall in Breakeven Inflation? AUTHORS Vasant Naik Executive Vice President Riccardo Rebonato Executive Vice President The recent dynamic
More informationHedge Fund Due Diligence in the New Normal: Insights from a Japanese Plan Sponsor Forum
Featured Solution January 2013 Bruce Brittain Your Global Investment Authority Hedge Fund Due Diligence in the New Normal: Insights from a Japanese Plan Sponsor Forum In November 2012, PIMCO held a forum
More informationCanadian Secular View: Into Darkness?
Canadian Perspectives July 2013 Ed Devlin Your Global Investment Authority Canadian Secular View: Into Darkness? Since Stephen Poloz was announced as the new Bank of Canada Governor, I have discovered
More informationThe Recession of 2020
Macro Perspectives March 2016 The Recession of 2020 JOACHIM FELS Mr. Fels is a managing director and global economic advisor based in the Newport Beach office. Prior to joining PIMCO in 2015, he was a
More informationCLOs: An Acronym for Contrarian Long-term Opportunity
VIEWPOINT PIMCO Alternatives CLOs: An Acronym for Contrarian Long-term Opportunity AUTHORS Giang Bui Executive Vice President Portfolio Manager Harin de Silva Executive Vice President Portfolio Manager
More informationSelecting the Optimal Investment Universe in Managed Futures
STRATEGY SPOTLIGHT May 2017 Selecting the Optimal Investment Universe in Managed Futures AUTHORS Matt Dorsten Senior Vice President Portfolio Manager Managed futures strategies use quantitative models
More informationDeep Value Equity Investing with PIMCO Pathfinder Strategy
Deep Value Equity Investing with PIMCO Pathfinder Strategy Introduction to Deep Value Equity Investing Deep value equity investing is an approach that seeks attractive risk-adjusted returns by investing
More informationChina and the New Global Monetary Order
GLOBAL CENTRAL BANK FOCUS June 2016 China and the New Global Monetary Order AUTHOR Tony Crescenzi Executive Vice President Portfolio Manager A major source of volatility in the global financial markets
More informationQ&AMAY Understanding Investment Opportunities in China
Your Global Investment Authority Q&AMAY 2015 Understanding Investment Opportunities in China Eric J. Mogelof, CFA, FRM Managing Director Head of PIMCO Asia-Pacific Luke Spajic, Ph.D. Executive Vice President
More informationViewpoints December 2010
Asset Allocation: Does Macro Matter? Niels K. Pedersen, Ph.D. Sébastien Page, CFA Financial Engineer Executive Vice President Client Analytics Head of Client Analytics Niels K. Pedersen, Ph.D. Financial
More informationA Quantitative Framework for Hedge Fund Manager Selection 1
Quantitative Research August 2013 Your Global Investment Authority Analytics A Quantitative Framework for Hedge Fund Manager Selection 1 Niels Pedersen, Ph.D. Senior Vice President Quantitative Research
More informationRelative Value Investing in a High Frequency World
FEATURED SOLUTION PIMCO Alternatives Relative Value Investing in a High Frequency World AUTHOR Danielle Luk Executive Vice President Portfolio Manager Relative value (RV) investing has grown and evolved
More informationUncovering Opportunities in Emerging Markets
Global Credit Perspectives il 214 k Kiesel Your Global Investment Authority Uncovering Opportunities in Emerging kets Emerging markets have disappointed investors in recent years: Growth is slowing and
More informationPIMCO Solutions Group
PIMCO Solutions Group Our Solutions Group harnesses PIMCO s broad capabilities to provide innovative solutions to the challenges investors face today. We draw on the firm s proprietary research and analytics,
More informationBonds Are Different: Resolving the Active vs. Passive Debate
s Are Different: Resolving the Active vs. Passive Debate Disclosures A word about risk: All investments contain risk and may lose value. Investing in the bond market is subject to risks, including market,
More informationMonetary Policy at Warp Speed
Viewpoint May 2015 Your Global Investment Authority Monetary Policy at Warp Speed An imaginative twist on theoretical physics forms the premise of the science fiction series Star Trek : An engine called
More informationLiquid Alternatives: Considerations for Portfolio Implementation
In Depth September 215 Your Global Investment Authority Liquid Alternatives: Considerations for Portfolio Implementation Justin Blesy Vice President Product Manager Ashish Tiwari Executive Vice President
More informationAs Energy Demand Outpaces Supply, Asia Looks Overseas to Refuel
Asia Credit Perspectives May 2013 Your Global Investment Authority As Energy Demand Outpaces Supply, Asia Looks Overseas to Refuel Raja Mukherji Executive Vice President Head of Asian Credit Research Energy
More informationIntroducing the PIMCO Global Advantage Bond Index (GLADI )
Introducing the PIMCO Global Advantage Bond Index (GLADI ) The PIMCO Global Advantage Bond Index (GLADI ) is a new investment-grade, multi-sector fixed income benchmark. Launched in January 2009, GLADI
More informationCapital Structure Modeling and LBOs 1
Quantitative Research June 2013 Your Global Investment Authority Capital Structure Modeling and LBOs 1 Rama Nambimadom Executive Vice President Shisheng Qu Senior Vice President Juan Porras Vice President
More informationProposed Changes in Risk- Based Capital Rules for U.S. Life Insurance Investments: A Game Changer for CIOs?
QUANTITATIVE RESEARCH December 216 Proposed Changes in Risk- Based Capital Rules for U.S. Life Insurance Investments: A Game Changer for CIOs? AUTHORS Soraya Kazziha Executive Vice President Head of EMEA
More informationLove, Money or Disappointment: What Will Asian Credit Investors Find in Their Red Envelopes?
Asia Credit Perspectives February 213 Your Global Investment Authority Love, Money or Disappointment: What Will Asian Credit Investors Find in Their Red Envelopes? Investing in Asia s credit sector is
More informationPeak Growth. December 2017
CYCLICAL OUTLOOK December 2017 Peak Growth We expect the global expansion to continue in 2018. Yet investors should prepare for both the consequences of policy shifts and the opportunities presented in
More informationThe Role of Equities and Alternative Assets in P&C Insurance Portfolios
In Depth January 2014 Your Global Investment Authority The Role of Equities and Alternative Assets in P&C Insurance Portfolios Ahmet E. Kocagil, Ph.D. Executive Vice President Client Analytics and Global
More informationA Model of Australian Household Leverage
Quantitative Research July 2015 Your Global Investment Authority Analytics A Model of Australian Household Leverage Laura Ryan, Ph.D. Vice President Quantitative Research Analyst In a recent Viewpoint,
More informationRising Insurance Premiums: A New Impetus for Voluntary Funding of Corporate Defined Benefit Plans
Featured Solution December 2014 Your Global Investment Authority Rising Insurance Premiums: A New Impetus for Voluntary Funding of Corporate Defined Benefit Plans It is not quite a perfect storm, the simultaneous
More informationLong-term Bond Investors Shouldn t Fear Rate Rises
VIEWPOINT February 2018 Long-term Bond Investors Shouldn t Fear Rate Rises AUTHORS Robert Mead Managing Director Portfolio Manager It s a commonly held belief that rising interest rates are universally
More informationWhat Lies Beneath. September 2016
CYCLICAL OUTLOOK September 2016 What Lies Beneath In our outlook for the remainder of this year and for 2017, we discuss the likelihood of continued economic expansion while assessing the underlying risks
More informationProxy Voting and Engagement Guidelines
March 2018 Proxy Voting and Engagement Guidelines Rest of the World State Street Global Advisors ( SSGA ) Rest of the World Proxy Voting and Engagement Guidelines i cover different corporate governance
More informationCYCLICAL OUTLOOK. March Scaling It Back. As the global economy improves, central banks are reducing extraordinary monetary policy support.
CYCLICAL OUTLOOK March 2017 Scaling It Back As the global economy improves, central banks are reducing extraordinary monetary policy support. 2 March 2017 Cyclical Outlook AUTHORS Joachim Fels Global Economic
More informationWelcome! An Introduction to PIMCO Funds: Global Investors Series plc
An Introduction to PIMCO Funds: Global Global Welcome! Established in 1971 in the US, PIMCO is today recognised as one of the world s leading investment management firms. With 12 international offices
More informationPRESS RELEASE For release in UK and Austria Not for release in the United States of America
PRESS RELEASE For release in UK and Austria Not for release in the United States of America PIMCO AND SOURCE ANNOUNCE THE LAUNCH OF THREE FIXED INCOME ETFs: PIMCO Euro Enhanced Short Maturity Source ETF,
More informationDesigning Outcome-Focused Defined Contribution Plans: Building Sustainable Income for Retirees
Your Global Investment Authority Designing Outcome-Focused Defined Contribution Plans: Building Sustainable Income for Retirees November 2012 Stacy L. Schaus, CFP Executive Vice President, Defined Contribution
More informationPIMCO TRENDS Managed Futures Strategy Fund: Seeking a Smoother Ride in an Uncertain World
April 2017 PIMCO TRENDS Managed Futures Strategy Fund: Seeking a Smoother Ride in an Uncertain World Trend-following, the primary approach used in managed futures strategies, has generally delivered strong
More information2017 PIMCO Qualified Dividend Rates
2017 PIMCO Qualified Dividend Rates PIMCO Funds PIMCO SHAREHOLDERS PIMCO Open-End Mutual Funds PIMCO Closed-End Funds PIMCO Interval Funds This document contains tax information on PIMCO open-end mutual
More informationPuerto Rico: A Credit Case Study. An in-depth look at PIMCO s integrated municipal investment process
Puerto Rico: A Credit Case Study An in-depth look at PIMCO s integrated municipal investment process PIMCO Muni Investment Process: Puerto Rico Access to PIMCO s broader research capabilities helps the
More informationStocks, Bonds and Causality
QUANTITATIVE RESEARCH March 218 Stocks, Bonds and Causality AUTHORS Jamil Baz Managing Director Co-head, Client Solutions and Analytics Steve Sapra Executive Vice President Co-head, Client Solutions and
More informationDefined Contribution Plans Global Retirement Expectations Gap
DC Dialogue Volume 10 Issue 1 January 2015 Your Global Investment Authority Defined Contribution Plans Global Retirement Expectations Gap This issue features an interview with Catherine Collinson, president
More informationLDI Investors: Time to Bite the Low-Hanging Fruit
FEATURED SOLUTION January 2017 LDI Investors: Time to Bite the Low-Hanging Fruit AUTHORS Rene Martel, FSA, CFA Executive Vice President Product Manager Last February, we highlighted a unique opportunity
More informationCult Figures. Investment Outlook August 2012
Investment Outlook August 2012 Bill Gross Your Global Investment Authority Cult Figures The cult of equity is dying. Like a once bright green aspen turning to subtle shades of yellow then red in the Colorado
More informationGlobal Rates Forecast
2019 Global Cash Outlook Innovations in Cash Global Rates Forecast We review our expectations for euro, sterling and dollar performance in 2019. We expect the European Central Bank to wind down its asset
More informationThe New Neutral Revisited
Secular Outlook May 2015 The New Neutral Revisited ACTIVE INVESTING FOR THE SECULAR HORIZON There are reasons to be cautiously optimistic about the outlook of the global economy. This is one of the distillations
More informationThere Will Be Haircuts
Investment Outlook May 2013 Bill Gross Your Global Investment Authority There Will Be Haircuts Good as Money, proclaimed the ad for Twenty Grand Vodka infused with Cognac. Being a beer drinker, and never
More informationSurvival of the Fittest?
Investment Outlook October 2013 Bill Gross Your Global Investment Authority Survival of the Fittest? I hate crows and my wife Sue hates bugs, but like most married couples we have learned to live with
More informationPIMCO s Asset Allocation Solution for Inflation-Related Investments
Inflation Response Multi-Asset Strategy Your Global Investment Authority Product Profile September 2011 PIMCO s Asset Allocation Solution for Inflation-Related Investments In an evolving, multi-speed world,
More informationUnderstanding collective investment trusts
Jed Petty, CFA Director of DC Strategies Understanding collective investment trusts Brendan MacKenzie, CFA Business Development Manager Matt McMenamy Business Development Manager About the authors As members
More informationCredit Research. Outlook Global Cash. Outlook. Innovations in Cash
2019 Global Cash Outlook Innovations in Cash Credit Research Outlook Instead of trying to predict the timing of the end of the current market cycle, we are considering the biggest risks within the global
More informationPIMCO Australian Bond Fund Wholesale Class Product Disclosure Statement
PIMCO Funds MFUND PMF04 ARSN 093 519 816 APIR ETL0015AU ISSUE DATE 29 SEPTEMBER 2017 PIMCO Australian Bond Fund Wholesale Class Product Disclosure Statement CONTENTS 1. About the Responsible Entity 2.
More informationIncome Fund Update: Building Resiliency in Volatile Markets
Income Fund Update: Building Resiliency in Volatile Markets January 28, 2019 by Dan Ivascyn, Alfred Murata of PIMCO SUMMARY During the fourth quarter of 2018, high quality assets were the key drivers of
More informationCheck out Simon Sineck s. LEARN YOUR WHY e-course. (available at startwithwhy.com) for tips on uncovering the purpose underlying your work.
STEWARDSHIP IN ACTION A roadmap for adopting a stewardship approach to retirement benefits management within your organization 1 GATHER With the detours in mind, plan how you re going to get from where
More informationFixed Income Manager Selection: Beware of Biases
QUANTITATIVE RESEARCH April 216 Fixed Income Manager Selection: Beware of Biases AUTHORS Ravi K. Mattu Managing Director Global Head, Analytics Mukundan Devarajan Executive Vice President Quantitative
More informationCocos: Not to be ignored
Cocos: Not to be ignored Cocos have performed positively this year, however, risk premiums have room to decline and carry remains a powerful driver of returns going forward. Cocos are no longer a niche
More informationCORPORATE SUBSTANTIAL SHAREHOLDER NOTICE
FORM 2 CORPORATE SUBSTANTIAL SHAREHOLDER NOTICE Notice pursuant to s. 324 of Part XV of the Securities and Futures Ordinance (Cap. 571) Form for use by a corporation giving notice of : (i) First acquiring
More informationCORPORATE SUBSTANTIAL SHAREHOLDER NOTICE
FORM 2 CORPORATE SUBSTANTIAL SHAREHOLDER NOTICE Notice pursuant to s. 324 of Part XV of the Securities and Futures Ordinance (Cap. 571) Form for use by a corporation giving notice of : (i) First acquiring
More informationAsia Credit Research. The Spanish Resolution: Different Symptoms call for Different Remedies
Asia Credit Research The Spanish Resolution: Different Symptoms call for Different Remedies Summary / Key credit considerations Tuesday, 13 June 2017 The resolution of Banco Popular Espanol SA has highlighted
More informationPRODUCT KEY FACTS. PIMCO FUNDS: GLOBAL INVESTORS SERIES PLC - Low Average Duration Fund. 10 April 2019
PRODUCT KEY FACTS Issuer: PIMCO Funds: Global Investors Series plc PIMCO FUNDS: GLOBAL INVESTORS SERIES PLC - Low Average Duration Fund 10 April 2019 This statement provides you with key information about
More informationCORPORATE SUBSTANTIAL SHAREHOLDER NOTICE
FORM 2 CORPORATE SUBSTANTIAL SHAREHOLDER NOTICE Notice pursuant to s. 324 of Part XV of the Securities and Futures Ordinance (Cap. 571) Form for use by a corporation giving notice of : (i) First acquiring
More informationFed Tapering: Turning Point or Technicality?
Fed Tapering: Turning Point or Technicality? ICMA 99 th Annual Conference 23 September 2013 Nanette Abuhoff Jacobson Vice President Global Investment Strategist Wellington Management Company, llp Wellington
More informationThe PROTEUS Commodity Risk Model
Quantitative Research November 2013 Your Global Investment Authority Analytics The PROTEUS Commodity Risk Model Peter Matheos 1 Executive Vice President Masoud Sharif Senior Vice President Mahmoud Hajo
More informationGlobal Equities VOLATILITY, UNCERTAINTY, AND THE AGING BULL MARKET
PRICE POINT July 2016 Timely intelligence and analysis for our clients. Global Equities VOLATILITY, UNCERTAINTY, AND THE AGING BULL MARKET KEY POINTS Top-down macroeconomic news is dominating markets in
More informationPIMCO Unconstrained Bond Fund Wholesale Class Product Disclosure Statement
PIMCO Funds MFUND PMF06 ARSN 168 313 755 APIR ETL0404AU ISSUE DATE 29 SEPTEMBER 2017 PIMCO Unconstrained Bond Fund Wholesale Class Product Disclosure Statement CONTENTS 1. About the Responsible Entity
More informationSeventh Inning Stretch
Investment Outlook September 2013 Bill Gross Your Global Investment Authority Seventh Inning Stretch They say that reality is whatever you wish it to be and I suppose that could be true. Just wish it,
More informationDemand for sovereign bonds: The importance of diversity
Demand for sovereign bonds: The importance of diversity ECB Bond Market Contact Group 1 July 2014 Christoph Rieger, Head of Interest Rate and Credit Research, +49 69 136 87664 Key themes (1) Core: Investor
More informationPIMCO Short-Term Strategies
1 Strategy Solution PIMCO Short-Term Strategies Morningstar 2015 U.S. Fixed Income Fund Manager of the Year Winner: Jerome Schneider and team for the PIMCO Short-Term Fund (PTSHX) For investment professional
More informationEuropean bank performance 10 years after the crisis
European bank performance 1 years after the crisis London, European banks have become more profitable, but revenue gap to US peers widened further in last few years Net income USD / EUR bn, up to Q4 17
More informationSENIOR SECURED BONDS GLOBAL SENIOR SECURED BONDS: IN BRIEF. WHY SHOULD INVESTORS CONSIDER
February 2019 BARINGS VIEWPOINTS February 2019 SENIOR SECURED BONDS AN UNDERAPPRECIATED SUBSET OF HIGH YIELD GLOBAL SENIOR SECURED BONDS: IN BRIEF. WHY SHOULD INVESTORS CONSIDER ADDING THIS ASSET CLASS
More informationFebruary 23, Dear Board Member:
February 23, 2018 Dear Board Member: As one of the world s largest investment managers, we are pleased to see the strong performance US companies have been delivering to shareholders, as steady capex growth
More informationDefined Contribution Consulting Support and Trends Survey
11th Annual Survey Highlights 2017 Defined Contribution Consulting Support and Trends Survey For institutional investor use only TABLE OF CONTENTS Survey overview 1 Defined contribution business 2 Plan
More informationEnterprise third party risk management program
Enterprise third party risk management program For institutional use only. Not intended for reproduction or use with the public. ny views expressed herein are those of the author(s), are based on available
More informationItalian Banks Asset Quality Still a problem but on an improving path. Marco Troiano, CFA
Italian Banks Asset Quality Still a problem but on an improving path Marco Troiano, CFA 30.03.2017 Agenda How big is Italian banks NPE problem? Is it getting worse? How well-provisioned are Italian banks?
More informationMarket Performance WEEKLY MARKET ANALYSIS. Is USD Strength Weighing Down EM Asia Stocks? Could Rising Italian Pressures Spillover to Europe?
1 OCTOBER 2018 Is USD Strength Weighing Down EM Asia Stocks? Since mid-april, the USD gained nearly 20% against emerging market (EM) Asia currencies and up 10% gains against G10 currencies. USD strength
More informationVendor management and oversight
Vendor management and oversight Emily Irving, CFE, CCS, CTPRP Manager, Vendor Risk and Oversight Jenna Wells Manager, Vendor Risk and Oversight Wellington Management Company LLP 2001032843/446607_8/446607/446607
More informationPIMCO Income Fund Wholesale Class Product Disclosure Statement
PIMCO Funds MFUND PMF08 ARSN 608 585 324 APIR ETL0458AU ISSUE DATE 29 SEPTEMBER 2017 PIMCO Income Fund Wholesale Class Product Disclosure Statement CONTENTS 1. About the Responsible Entity 2. How the PIMCO
More informationOFFICIAL INSTITUTIONS GROUP. Trusted Partner for Sovereign Investors
OFFICIAL INSTITUTIONS GROUP Trusted Partner for Sovereign Investors Official Institutions Group YOUR TRUSTED PARTNER SSGA s Official Institutions Group is dedicated to managing assets on behalf of sovereign
More informationPost MiFID Research and Trading
Post MiFID Research and Trading For institutional use only. Not intended for reproduction or use with the public. ny views expressed herein are those of the author(s), are based on available information,
More informationThe Case for Managed Volatility in Emerging Markets. Investment Focus
Investment Focus The Case for Managed Volatility in Emerging Markets While emerging markets equities have gained significant interest from global investors over the last several years, the asset class
More informationHedging for Profit: A Novel Approach to Diversification
QUANTITATIVE RESEARCH October 2017 Hedging for Profit: A Novel Approach to Diversification AUTHORS Jamil Baz Managing Director Co-head, Client Solutions and Analytics Josh Davis Executive Vice President
More informationDisclosure of transparency notifications
Disclosure of transparency notifications (Article 14 of the Law of 2 May 2007 on the disclosure of significant shareholdings in listed companies) bpost discloses a notification of significant shareholdings
More informationInvestment Insights What are US commercial mortgage-backed securities (US CMBS)?
Investment Insights What are US commercial mortgage-backed securities (US CMBS)? Introduction US Commercial mortgage-backed securities (US CMBS) are bonds collateralized by commercial real estate loans
More informationThe Global Outlook: Stable But Not Secure
SECULAR OUTLOOK June 2016 The Global Outlook: Stable But Not Secure Good investment opportunities remain, but investors must be compensated for growing and heightened uncertainty and risks of policy exhaustion.
More informationGlobal Fixed Income Weekly
Global Fixed Income Weekly Executive Summary US nonfarm payroll employment rose by 103,000 in March, falling short of consensus expectations by 82,000; the undershoot is likely due to weather effects and
More informationDisclosure of transparency notifications
Disclosure of transparency notifications (Article 14 of the Law of 2 May 2007 on the disclosure of significant shareholdings in listed companies) bpost discloses a notification of significant shareholdings
More information55 East 52nd Street, New York, NY, 10055, U.S.A. BlackRock (Netherlands) B.V. Rembrandt Tower, 17th floor, Amstelplein, Amsterdam, Netherlands
PRESS RELEASE Brussels, 21 June 2018 17:40 (CET) Ageas and : Transparency notification REGULATED INFORMATION In accordance with the rules on financial transparency*, Blackrock has notified Ageas on 19
More information