BlackRock is bullish on China’s domestic bond market. Here’s why

BlackRock has a “positive” view on the domestic bond market in China, said Neeraj Seth, the U.S. investment giant’s head of Asian credit. “We still see …

SINGAPORE — China’s massive onshore bond market offers investors a level of returns that may be hard to find elsewhere in the current environment of low interest rates, a BlackRock portfolio manager said on Thursday.

The U.S. investment giant has a “positive” view on the domestic bond market in China, where economic data and continued monetary policy support point to a sustained economic recovery, said Neeraj Seth, BlackRock’s head of Asian credit.

“We still see China bond market to be fairly attractive,” he told CNBC’s “Street Signs Asia.”

“You have high nominal yield, potential to generate returns in an environment where rates are pretty low globally, and a portfolio diversification,” he added.

Foreign investors remained under-invested in Chinese onshore bonds, accounting for just slightly over 2% of the $16 trillion market, noted Seth. He said foreign participation is set to increase as more Chinese bonds get included in major global indexes.

Explaining the case for Chinese bonds, Seth said the market offers many choices to build a portfolio that is both diversified and resilient — two important attributes that investors typically seek.

SGX, In Collaboration With HSBC And Temasek, Completes Pilot Digital Bond For Olam International

… Olam International; This marks the first step towards wider use of smart contracts and distributed ledger technology (DLT) for the Asian bond market.
  • SGX’s digital asset issuance, depository and servicing platform was used to launch and settle in parallel, the first digital bond issuance for Olam International
  • This marks the first step towards wider use of smart contracts and distributed ledger technology (DLT) for the Asian bond market

Singapore Exchange (SGX), working together with HSBC Singapore and Temasek, has completed its first digital bond issuance on SGX’s digital asset issuance, depository and servicing platform, successfully replicating a S$400 million 5.5-year public bond issue and a follow-on S$100 million tap of the same issue by Olam International.

An Asia first for a syndicated public corporate bond, this digital bond marks another milestone in SGX’s use of digital asset technology, by streamlining processes for issuers, underwriters, investors and ecosystem participants across primary issuance and asset servicing.

SGX utilised DAML, the smart contract language created by Digital Asset, to model the bond and its distributed workflows for issuance and asset servicing over the bond’s lifecycle. SGX’s solution uses smart contracts to capture the rights and obligations of parties involved in issuance and asset servicing, such as arrangers, depository agents, legal counsel and custodians.

The digital bond used HSBC’s on-chain payments solution which allows for seamless settlement in multiple currencies to facilitate transfer of proceeds between the issuer, arranger and investor custodian.

Key efficiencies observed within the pilot include timely ISIN (identifier) generation, elimination of settlement risk (for issuer, arranger and investors), reduction in primary issuance settlement (from 5 days to 2 days) as well as automation of coupon and redemption payments and registrar functionality. For more information, please visit this webpage.

Building on this digital issuance, SGX will work with issuers, arrangers, custodian banks and investors to digitalise bond issuance, depository and asset servicing, progressively growing the fixed income ecosystem.

Lee Beng Hong, Senior Managing Director, Head of Fixed Income, Currencies and Commodities (FICC), SGX, said, “We are very excited that this collaboration with HSBC and Temasek has led to the successful completion of the first digital syndicated public corporate bond in Asia. Debt capital markets globally are characterised by deeply engrained legacy systems and processes which can be made faster, more accurate and efficient with this new technology. DLT and smart contracts are rapidly evolving technologies, and our vision is to fully digitalise the end-to-end corporate bond issuance and asset servicing process. We look forward to playing a part in strengthening the fixed income market infrastructure of Singapore, Asia’s fixed income hub for bond issuers.”

David Koh, Head of Global Liquidity and Cash Management, HSBC Singapore, said, “We’re proud to be working closely with SGX and Temasek to drive faster, more transparent, and fully secure settlements for bond issuers and investors. This first digital bond issuance for Olam International shows how our on-chain solution can fulfil payment needs in DLT-based ecosystems, and demonstrates our desire to shape and participate in the next generation of asset networks, to better service our securities services clients. We look forward to bringing this technology to our clients in Singapore and beyond.”

Chia Song Hwee, Deputy Chief Executive Officer at Temasek, added, “Innovative technologies such as blockchain technology are key enablers that can transform processes and systems to create game-changing opportunities. We are pleased to have partnered SGX, HSBC and Olam in this initiative. The successful bond issuance validates the potential for issuances of other assets and products, and marks an important milestone towards improving financial processes and workflows.”

N Muthukumar, Managing Director and Group CFO of Olam International, said, “Olam is delighted to pilot Asia’s first digital bond in close partnership with SGX, Temasek and HSBC. Going digital will make the entire process more efficient and transparent for all parties – issuers like us receive our funds more speedily, investors get their bonds more quickly while the arrangers, custodian and banks benefit from the reduced probability of error and speed. This is in line with Olam’s focused push into digitalisation as part of our refreshed strategy, to grow sustainably and live our purpose of re-imagining global agriculture and food systems.”

“The bond market is one of the last bastions of risk, holding on to paper and manual processes,” said Yuval Rooz, Co-founder and CEO, Digital Asset. “Despite the growth in electronic bond trading, there are still many aspects that require manual intervention. SGX’s DAML smart contract solution solves a major pain point market participants have been working to fix for years. We look forward to our continued work with SGX as they move to digitise the end-to-end bond issuance process.”

SGX_DAP_01Sep20

SGX completes pilot digital bond issuance for Olam

SGX utilised DAML – the smart contract language created by blockchain start-up Digital … DLT (distributed ledger technology) and smart contracts are …

SINGAPORE (THE BUSINESS TIMES) – The Singapore Exchange (SGX), with HSBC Singapore and Temasek, has completed its first digital bond issuance for agri-food giant Olam International on SGX’s digital asset issuance, depository and servicing platform.

In a press statement on Tuesday (Sept 1), SGX said it has successfully replicated a $400 million 5.5-year public bond issue and a follow-on $100 million tap of the same issue by Olam.

SGX utilised DAML – the smart contract language created by blockchain start-up Digital Asset – to model the bond and its distributed workflows for issuance and asset servicing over the bond’s life cycle.

SGX said its solution uses smart contracts to capture the rights and obligations of parties involved in issuance and asset servicing, such as arrangers, depository agents, legal counsel and custodians.

It added that the digital bond used HSBC’s on-chain payments solution, which allows for seamless settlement in multiple currencies to facilitate transfer of proceeds between the issuer, arranger and investor custodian.

Some key efficiencies observed within the pilot include timely ISIN (identifier) generation, elimination of settlement risk (for issuer, arranger and investors), reduction in primary issuance settlement (from five to two days) as well as the automation of coupon and redemption payments and registrar functionality.

“An Asia first for a syndicated public corporate bond, this digital bond marks another milestone in SGX’s use of digital asset technology, by streamlining processes for issuers, underwriters, investors and ecosystem participants across primary issuance and asset servicing,” said the Singapore bourse.

Building on this digital issuance, SGX added that it will work with issuers, arrangers, custodian banks and investors to digitalise bond issuance, depository and asset servicing to progressively grow the fixed-income ecosystem.

Mr Lee Beng Hong, SGX’s senior managing director and head of fixed income, currencies and commodities, said: “Debt capital markets globally are characterised by deeply engrained legacy systems and processes, which can be made faster, more accurate and efficient with this new technology. DLT (distributed ledger technology) and smart contracts are rapidly evolving technologies, and our vision is to fully digitalise the end-to-end corporate bond.”

Olam managing director and group chief financial officer N. Muthukumar said: “Going digital will make the entire process more efficient and transparent for all parties – issuers like us receive our funds more speedily, investors get their bonds more quickly, while the arrangers, custodian and banks benefit from the reduced probability of error and speed.”

Investment Strategy In Government Bonds

It is hard to say how much investing in government bonds will help your pension portfolio, but there are some unique benefits for those willing to take their time. Those who invest in individual bonds can often choose between 1 – 2 bond funds or buying in a broker account. If this seems too complex to broaden your investment portfolio, or if you don’t want to use a financial adviser as a guide, there are two other ways to add fixed-income instruments to your investment. Buying bonds in the form of a government bond fund or private equity fund can be a headache, and consulting a qualified asset manager can help you choose the best approach to take now. [Sources: 7, 8, 9, 18]

Like shares, government bonds can be held and sold to other traders on the market. Investors can also buy government bonds on the secondary market from banks and brokers who buy them directly from the government or from a bank or broker in exchange for government bonds. [Sources: 10, 13]

If you need short-term investment grade bonds, you can buy ETFs in the same way as government bonds. You can reduce your risk by combining a government bond portfolio with a portfolio of other high-quality bonds, such as equities or bonds from other countries. [Sources: 7, 17]

If your main strategic objective when taking out bonds is diversification, you can choose an active or passive bond selection strategy. Investors seeking capital preservation and income diversification can simply buy bonds and hold them until maturity. This approach has the potential to lead to long-term investment in government bonds and other high-quality bonds. [Sources: 12, 16]

Since bonds with longer maturities typically have higher interest rates, this strategy involves investing in long-term bonds. Treasury bonds carry the risk that interest rates will rise over time, reducing the value of the bond. [Sources: 1, 11]

For example, if you want to buy a home in 15 years, you can schedule your Treasury bond investments to match the time you expect to need the money. If you choose to capitalize on higher returns by investing more in government bonds, your position as a Treasury bond could be diminished in the future when yields return to normal. This strategy could be considered first for conservative investors – investors who are unsure how to invest but want a predictable plan for working until retirement age. [Sources: 9, 10]

Investors looking for the traditional benefits of bonds can also choose a passive investing strategy that seeks to match the performance of bond indices. This includes buying and holding bonds until maturity or investing in bond funds or portfolios that track bond indices. Diversification is key – if you are only interested in Treasury bonds, you should diversify as much as possible to stay fully invested. An iShares Treasury Bond ETF (ETF) can help investors maintain their exposure to the Treasury bond market. [Sources: 2, 8, 16]

While a passive strategy involves investing in selected bonds, an active strategy requires an individual bond selection to track the performance of the index. [Sources: 12]

Investors looking for a safe investment with high returns would need a minimum investment of £1,000 in return for flexibility. Corporate bonds can be bought on the Retail Bond Platform on the London Stock Exchange. You don’t have to access your money until the bond matures, and the fund is within the FDIC’s $250,000 limit. [Sources: 3, 15]

They can buy Treasury bonds managed by the Federal Reserve Bank of New York, the US Treasury or the Treasury Department of the Secretary of State. [Sources: 1]

For most retail investors, the best way to invest in these bonds is to buy TreasuryDirect bonds or ETF bond funds. While you can buy government bonds directly from the US government, most bonds must be purchased through the Federal Reserve Bank of New York or the Secretary of State’s Treasury. Because government bonds are better valued and represent a safer and safer investment, traders who prefer riskier investment strategies may prefer high-yield bonds to government bonds. Investors who want to diversify their bond holdings may need to take a little more risk to get involved, but forget higher returns. [Sources: 0, 4, 6, 15]

This type of bond is well suited – for purchases – and – holding strategies, because it minimizes the risk associated with embedded options that are included in the bond issue contract and remain with the bonds for life. [Sources: 14]

Buying government bonds typically carries little or no default risk, but when the bond is traded on the open market, it can lose value when interest rates rise above the face value of the bonds. When buying individual bonds, investors want to manage their interest rate risk by diversifying the maturities of their bonds. This strategy involves an investor buying longer-dated bonds rather than medium-term bonds, a financial asset invested in long-term government bonds that are limited by the government’s bond issue contract and its maturity date. We begin by looking at two types of government bonds: sovereign debt and sovereign equity. [Sources: 3, 5, 7, 18]

Sources:

(0): https://www.cmcmarkets.com/en-gb/trading-guides/invest-in-bonds

(1): https://www.fool.com/investing/how-to-invest/bonds/treasury-bonds.aspx

(2): https://www.blackrockblog.com/2020/06/02/trending-now-treasury-etfs/

(3): https://www.asktraders.com/learn-to-trade/stock-trading/how-to-buy-government-bonds/

(4): https://www.wellsfargo.com/goals-investing/investing-types/bonds/

(5): https://buckinghamadvisor.com/you-can-be-too-conservative-051313/

(6): https://investinganswers.com/articles/bonds-101-how-navigate-complex-world-bonds

(7): https://www.bankrate.com/investing/how-to-invest-in-bonds/

(8): https://www.fidelity.com/learning-center/investment-products/fixed-income-bonds/bond-investment-strategies

(9): https://www.sdmayer.com/insights/blogs/wealth-management/is-investing-in-government-bonds-a-smart-move-sdm/

(10): https://www.acorns.com/money-basics/investing/long-term-treasury-bonds/

(11): https://www.wiseradvisor.com/article/bond-strategies-for-various-financial-goals-235/

(12): https://saylordotorg.github.io/text_personal-finance/s20-03-bond-strategies.html

(13): https://tendercapital.com/en/what-is-the-difference-between-government-bonds-and-corporate-bonds/

(14): https://www.investopedia.com/articles/bonds/08/bond-portfolio-strategies.asp

(15): https://www.realwealthnetwork.com/learn/safe-investments-with-high-returns/

(16): https://www.pimco.com/en-us/resources/education/everything-you-need-to-know-about-bonds

(17): http://www.dvzcpa.com/investment-strategies.php?item=83&catid=28&cat=Investment%20Basics:%20What%20You%20Should%20Know

(18): https://www.forbes.com/advisor/investing/how-to-buy-bonds/

Price Capital Management, Inc. Buys PIMCO Enhanced Short Maturity Active Exchange-Trad …

… iShares iBoxx $ Investment Grade Corporate Bond, Sells SPX FLOW Inc, Blackrock Debt Strategies Fund Inc, Credit Suisse High Yield Bond Fund.

Lafayette, LA, based Investment company Price Capital Management, Inc. (Current Portfolio) buys PIMCO Enhanced Short Maturity Active Exchange-Trad, iShares iBoxx $ Investment Grade Corporate Bond, sells SPX FLOW Inc, Blackrock Debt Strategies Fund Inc, Credit Suisse High Yield Bond Fund, Alliancebernstein Glb High Inc Fund Inc, Western Asset High Income Oppor Fd Inc during the 3-months ended 2020Q2, according to the most recent filings of the investment company, Price Capital Management, Inc.. As of 2020Q2, Price Capital Management, Inc. owns 2 stocks with a total value of $19 million. These are the details of the buys and sells.

For the details of Price Capital Management, Inc.’s stock buys and sells,go to https://www.gurufocus.com/guru/price+capital+management%2C+inc./current-portfolio/portfolio

These are the top 5 holdings of Price Capital Management, Inc.

  1. PIMCO Enhanced Short Maturity Active Exchange-Trad (MINT) – 183,040 shares, 96.51% of the total portfolio. New Position
  2. iShares iBoxx $ Investment Grade Corporate Bond (LQD) – 5,000 shares, 3.49% of the total portfolio. New Position
  3. Blackrock Debt Strategies Fund Inc (DSU) – 0 shares, 0.00% of the total portfolio. Shares reduced by 10000%
  4. Credit Suisse High Yield Bond Fund (DHY) – 0 shares, 0.00% of the total portfolio. Shares reduced by 10000%
  5. Alliancebernstein Glb High Inc Fund Inc (AWF) – 0 shares, 0.00% of the total portfolio. Shares reduced by 10000%

New Purchase: PIMCO Enhanced Short Maturity Active Exchange-Trad (MINT)

Price Capital Management, Inc. initiated holding in PIMCO Enhanced Short Maturity Active Exchange-Trad. The purchase prices were between $98.98 and $101.69, with an estimated average price of $100.71. The stock is now traded at around $101.82. The impact to a portfolio due to this purchase was 96.51%. The holding were 183,040 shares as of .

New Purchase: iShares iBoxx $ Investment Grade Corporate Bond (LQD)

Price Capital Management, Inc. initiated holding in iShares iBoxx $ Investment Grade Corporate Bond. The purchase prices were between $121.1 and $134.5, with an estimated average price of $129.98. The stock is now traded at around $137.67. The impact to a portfolio due to this purchase was 3.49%. The holding were 5,000 shares as of .

Sold Out: SPX FLOW Inc (FLOW)

Price Capital Management, Inc. sold out a holding in SPX FLOW Inc. The sale prices were between $25.87 and $41.71, with an estimated average price of $32.54.

Sold Out: Western Asset Global High Inc Fd Inc (EHI)

Price Capital Management, Inc. sold out a holding in Western Asset Global High Inc Fd Inc. The sale prices were between $7.31 and $9.51, with an estimated average price of $8.68.

Sold Out: Wells Fargo Income Opportunities Fund (EAD)

Price Capital Management, Inc. sold out a holding in Wells Fargo Income Opportunities Fund. The sale prices were between $5.88 and $7.48, with an estimated average price of $6.86.

Sold Out: Ivy High Income Opportunities Fund (IVH)

Price Capital Management, Inc. sold out a holding in Ivy High Income Opportunities Fund. The sale prices were between $9.42 and $11.91, with an estimated average price of $10.87.

Sold Out: Credit Suisse High Yield Bond Fund (DHY)

Price Capital Management, Inc. sold out a holding in Credit Suisse High Yield Bond Fund. The sale prices were between $1.64 and $2.06, with an estimated average price of $1.9.

Sold Out: Western Asset High Income Oppor Fd Inc (HIO)

Price Capital Management, Inc. sold out a holding in Western Asset High Income Oppor Fd Inc. The sale prices were between $3.88 and $4.8, with an estimated average price of $4.47.

Here is the complete portfolio of Price Capital Management, Inc.. Also check out:

1. Price Capital Management, Inc.’s Undervalued Stocks

2. Price Capital Management, Inc.’s Top Growth Companies, and

3. Price Capital Management, Inc.’s High Yield stocks

4. Stocks that Price Capital Management, Inc. keeps buying