Investment tip of the week

Dollars1.jpgFollowing on from the blog’s note yesterday, an investment banker reader passed on a similar insight from the high yield sector of the bond market.

Currently, retail investors are desperate for income-producing assets, with global interest rates very low by recent historical standards. So to help supply meet demand, her bank’s high yield bond team are working night and day to package high yield bonds for sale to the retail sector.

As with Dalian, these investors never look beyond the promised level of yield. Why bother with the boring stuff that might help you decide whether the company could actually afford to pay the interest being offered?

However, she did offer one clue about the underlying quality of these bonds. Apparently the bank is not proposing to keep a share of these ‘red hot’ deals on its own trading book. Blog readers might also like to take a careful look before investing their hard-earned cash.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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