AllianceBernstein hires investment grade credit manager from BlackRock

Tiffanie Wong, AB’s director of global and US investment grade credit, welcomed Asba to the team, adding her nomination brings “further breadth and depth to our capabilities”. Asba brings more than 12 years’ experience in global fixed income, sustainability and credit strategies to AB. Prior to joining the firm, she was a portfolio manager as part of BlackRock’s global investment grade credit team, working with both retail and institutional clients, and covering the global sustainable accounts. AllianceBernstein launches two growth equity strategies Before that, Asba held roles as …

EFG AM’s Joaquin Thul: UK economic outlook in a changing policy environment

A change in the political backdrop, an improved macroeconomic outlook and attractive valuations should support an upgrade in our views of the UK market. Different political environment The effects of the global pandemic, the aftermath of the Brexit deal and negative shocks from the Russia-Ukraine war on energy prices has led to an underperformance of the UK economy. GDP growth slowed from 1.6% year-on-year in 2019 to 0.1% YoY in 2023. BoE’s Ben Broadbent: Summer rate cut on horizon if economic data follow forecasts Annual inflation peaked at 11% in November 2022 after a series…

LGIM red flags two underperforming Future World funds in assessment of value

Out of 83 funds assessed, 81 strategies were found to be delivering value for investors. However, the L&G Future World Sustainable European Equity Focus and Future World Sustainable UK Equity Focus funds failed to obtain the desired long-term performance outcomes.   These funds also failed the firm’s value assessment report last year. Since then, a new lead fund manager was appointed and the funds repositioned, including selling some smaller company stocks, reducing tracking error and increasing the number of holdings. BlackRock closes EM fund following poor value assessment findings …

Britain’s inflation rate could be about to drop below the Bank of England’s 2% target

Economists see the latest U.K. inflation print, out Wednesday, taking the headline rate near or even below the Bank of England’s 2% target. That is largely due to energy prices, which fell sharply in April. Markets remain divided on the chance of a June interest rate cut, and the level of services inflation may be key. A shopper selects fresh produce from a market stall in the Kingston district of London, UK, on Monday, May 20, 2024.  Bloomberg | Bloomberg | Getty Images

LONDON — U.K. inflation could be about to hit a major milestone, with some forecasting that a sharp fall in the April print will take the headline rate below the Bank of England’s 2% target.

That would represent a plunge from the current level of 3.2% and could “make or break” a June interest rate cut, economists say.

The decline will largely be driven by the energy market, after the regulator-set cap on household electricity and gas bills came down by 12% at the start of April.

A reading below 2% on Wednesday would be the lowest headline inflation rate since April 2021, and a cooling from the peak of 11.1% hit in October 2022 — when U.K. price rises were among the most severe of all developed economies.

The country has been hit by a range of inflationary pressures, including a persistently tight labor market, weakness in the currency increasing the cost of imports, and steeper rises in gas bills than were seen elsewhere.

‘Momentous’

Ashley Webb, U.K. economist at Capital Economics, said that if the headline rate does fall below 2% in April, as he expects, it would be “momentous.”

“This will be crucial in determining whether the first interest rate cut from 5.25% will happen in June (as we expect) or in August. What’s more important is what happens next. We think inflation will fall further, perhaps even to 1.0% later this year,” Webb said in a Friday note.

A Reuters poll of economists puts the headline estimate slightly higher, at 2.1%.

The Bank of England held interest rates steady at its May meeting, as policymakers sent out signals they were preparing for a rate cut in the summer but declined to zero in on June — as those at the European Central Bank have done.

BOE Governor

CNBC

The Best Opportunities in Global High Yield Bonds

Valerio Baselli: Hello and welcome to Morningstar. Rising global bond yields continue to channel interest and demand into bond funds. In such a landscape, investors hungry for income also look at high-yield bonds. But what is the outlook for this asset class in 2024? And what are the risks? To answer those questions, today I’m joined by Tim Crawmer, Global Credit Strategist at Payden & Rygel.

So, Tim, high-yield bonds performed very well in 2023. Do you think such performance will be difficult to replicate in 2024? And overall, what is your outlook for the short to medium term?

Tim Crawmer: Sure. In 2023, we saw stellar returns in global high-yield in the 12% to 13% area in USD terms. That kind of performance is going to be extremely hard to replicate this year. However, there are a lot of good things going on within global high-yield. Companies have very strong fundamentals that are supported by strong global macroeconomic conditions. And there is a lot of demand for global high-yield bonds right now that is outstripping the amount of supply that is coming to market. This will support valuations and we think that you will get around a 5% to 7% type of return in 2024.

Baselli: When it comes to high-yield bonds, of course, bond-picking is very important. What is your investment process within the high-yield fixed income universe? And where do you see the best opportunities right now?

Crawmer: Sure. In the global high-yield universe, bond picking, as you pointed out, is extremely important. Here at Payden, we pride ourselves on doing extensive bottom-up fundamental analysis. This research is conducted by a very experienced analyst pool. And the one differentiating factor for us here is our analysts cover their sectors on a global basis. So, they cover US high-yield issuers, European high-yield issuers, and emerging market high-yield issuers in their sectors. This allows them to find the best relative value opportunities globally for our investment strategy.

And currently where we’re seeing the best opportunities is in the banking sector. We found that a lot of the subordinated rated securities from the stronger systemically important banks globally are offering valuations that are attractive versus other high-yield issuers. A lot of that is due to the fact that people still have bad memories about what happened with Credit Suisse last year. And that has kept valuations on the cheap end, but

JPMorgan faces an enviable dilemma

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Kester Capital acquires two consulting businesses for portfolio companies MAP and GXP 

UK lower mid-market private equity firm Kester Capital has acquired AxTalis, a Belgium-based consulting services provider to the pharmaceutical and biotech sectors, and North Carolina-based Polaris Compliance Consultants on behalf of its portfolio companies MAP Patient Access and GXP Engaged respectively. 

The acquisitions were enabled by Kester’s latest fund, Kester Capital III, according to a press release. The fund closed at its £200m hard cap in March.

Kester Capital said that the AxTalis add-on would “complement MAP’s existing presence in the UK and Ireland” in building a pan-European business, while Polaris would combine with GXP’s newly formed US entity and expand the firm’s presence beyond the UK, Europe and Asian markets.

Thoma Bravo exits cybersecurity company Venafi in $1.54bn deal

Israel-based identity security company CyberArk has agreed to acquire Venafi, a machine identity management company backed by software-focused private equity firm Thoma Bravo, for approximately $1.54bn — to be paid in $1bn cash and $540m in CyberArk shares. 

The transaction is expected to close in H2 2024.

In a statement on Monday, CyberArk highlighted Venafi’s capabilities in certificate lifecycle management, private public key infrastructure (PKI), IoT identity management and cryptographic code signing. The company said that the acquisition is expected to add approximately $150 million in annual recurring revenue, as well as boost margins.

Matt Cohen, Chief Executive Officer, CyberArk, said that the acquisition of Venafi would “empower Chief Information Security Officers to defend against increasingly sophisticated attacks that leverage human and machine identities as part of the attack chain”.

Chip Virnig, a Partner at Thoma Bravo, added that his firm had “accelerated SaaS growth, expanded margins, and successfully created a best-in-class SaaS offering” at Venafi.

Morgan Stanley & Co and Latham & Watkins are advising CyberArk, while Piper Sandler and Kirkland & Ellis are advising Thoma Bravo.

BoE’s Ben Broadbent: Summer rate cut on horizon if economic data follow forecasts

In his final speech as deputy governor at a Bank of England event yesterday (20 May), he argued the large inflationary shocks brought by the pandemic and the war in Ukraine are now over, with economic data stabilising over the last year or so. Bank of England mirrors Federal Reserve and holds interest rates As such, he argued if data follow the current forecasts, the BoE is likely to begin cutting rates at some point over the summer. “Whatever the priors of its individual members, the MPC will continue to learn from the incoming data and, if things continue to evolve with its forec…

Asia Dragon trust hunts for potential new manager months after merger

According to a stock exchange notice, the review seeks to “understand the drivers behind relative performance of the company” and what actions its investment manager, abrdn, is taking to improve this. Ashoka WhiteOak Emerging Markets proposes merger with Asia Dragon Stanhope Consulting has been appointed to assist in the review, and the board has confirmed it is “interested to consider proposals from established fund management groups” with experience of similar equity strategies. “Any such proposals will be considered alongside the current management arrangements,” the statement r…