Jamaica’s “Catastrophe Bond” May Be a Lifeline After Hurricane Melissa
As Jamaicans across the island work to rebuild their lives in the aftermath of Hurricane Melissa, a financial instrument called a “catastrophe bond” or “cat bond” will soon provide the Government with a vital financial cushion. What Is a Catastrophe Bond? A catastrophe bond is a special kind of insurance-linked investment that helps governments and […]
Understanding Bonds: A Steady Path to Building Wealth and Generating Income
Key Takeaways Bonds give investors steady income and stability, which helps them balance risk, diversify their portfolios, and build long-term wealth even when the market is volatile. Knowing things like the yield, maturity, and credit rating of a bond can help you find investments that fit your financial goals and risk tolerance. When you invest […]
Sticker Shock? When Buying High Can Still Be Smart
With interest rates coming down, the prices of most high-quality bonds have gone up. That means many of the bonds we offer are now trading at a premium i.e. above their original face (par) value. Understandably, some investors balk at the comparatively higher prices (compared to previous years or even just a few months ago) […]
Jamie Bond: The Investor Who Refused to Stand Still
Jamie Bond was never just another investor. In his 20s, he treated the market like a casino chasing high risk stocks, doubling down when friends said he was crazy, and somehow miraculously landing on the right side of history. By 30, he had tasted both euphoria and near ruin. That was his first lesson: markets […]
How Do Bonds Generate Income for Investors?
Bonds have long been a dependable way to grow income without taking on excessive risk. For investors in Jamaica and across the Caribbean, they provide not just predictable payments but also protection against market swings and currency depreciation. At their core, bonds are a fixed-income investment. You lend money to an issuer and in exchange […]
Stability when everything else feels fragile
When crises erupt, be it war, banking turmoil, or market panic, investors around the world turn to one refuge: U.S. dollar bonds. This “flight to safety” is not just habit; it’s survival. In a world where headlines shift by the hour and risks feel unmanageable, U.S. dollar bonds, especially Treasuries, offer the closest thing to […]
Bond Strategies for Today’s Market
As inflation cools and the Fed signals a potential shift in policy, bonds are back in focus for investors seeking stability, income, and long-term value. Yields remain attractive, volatility is easing and now is an ideal time to build or adjust a fixed income portfolio using strategies designed for the current environment. There are several […]
Is the Bond Market Back? – Analyzing the 2025 Bond Rally and What It Means for Investors
After years of turbulence, the bond market is showing renewed signs of strength in 2025. The sharp increase in yields during the Federal Reserve’s aggressive tightening cycle from 2022 to 2023 had left fixed-income investors bruised. But as inflation pressures subside, interest rates peak, and central banks shift toward more accommodative stances, the bond market […]
Big Beautiful Bonds: How Trump’s Economic Agenda Could Create Opportunities for Bond Investors
As Donald Trump renews his push for a “Big Beautiful Bill”, a sweeping economic package aimed at revitalizing U.S. manufacturing, cutting taxes, and accelerating infrastructure spending, markets are watching with growing caution. While the rhetoric remains bold, the implications for bond investors are becoming more complex. Originally touted as a growth-boosting policy, the bill has […]
Loco for COCO bonds: Where Contingent Convertible Bonds Fit in the Capital Structure
Key takeaways CoCos are hybrid bonds that can convert into equity or be written down if a bank’s capital falls too low. CoCo bonds sit below senior and subordinated bonds in the capital structure, which means they have higher yields but greater risk. Compared with high-yield junk bonds, CoCos from strong issuers may offer better […]
How CFOs should navigate the current environment
Whether you are managing a large corporate balance sheet or your retirement portfolio, all CEOs, CFOs, investors or financial controllers benefit from understanding the impact of the macro-economic environment on their business or investment strategy. Today we look at US and Jamaican monetary policy and their implications for our investment strategy: Central Bank Policy – Interest […]
Financial Markets Performance: Looking Back while Navigating Ahead
The year 2024 was a fascinating one for global financial markets, marked by shifting monetary policies, evolving geopolitical dynamics, and a continued focus on sustainability. While the markets faced periods of volatility, certain sectors demonstrated resilience, offering both challenges and opportunities for investors. In this article we’ll review the performance of financial markets in 2024, […]
Trump 2.0 – Implications for markets
The implications of a second Trump presidency could significantly shape the U.S. economy, the global economy, financial markets, and financial assets. Investors and policymakers are bracing for potential shifts in fiscal and monetary policy, as well as broader economic trends that are likely to unfold over the coming years. U.S. Economic Outlook A Republican “red […]
How to replace your NROCC income
On November 10th, 2024, investors will receive the balance of their principal investments in the NROCC 9.375% 2024 bond. Today we will: Refresh our memory on the details of the NROCC bond Identify potential alternatives List the questions investors should ask their advisors when evaluating alternatives A Refresher on what you own The National Road […]
Changing Gears: No bonds, now what?
When the interest rate environment changes, investors face unique challenges, especially when it comes to replacing a maturing bond. For instance, many local investors hold the NROCC (National Road Operation and Construction Company Ltd.) 9.375% bond maturing in November. They received 50% of the principal in 2023, when yields and coupons were at record highs, […]
Finding a Home for Your Funds
We are now officially in the last quarter of the year, and some would say time flies when you are having fun. Although, many fixed income investors would probably beg to differ and say the last two years were not fun due to market volatility. How quickly we forget the opportunities the volatility presented! The […]
Mastering the Market Maze
The era of elevated bond yields and attractive fixed-income returns is receding, ushering in a new phase where the dynamics of income generation and capital preservation require a sophisticated approach. The inverse relationship between bond prices and yields has been a cornerstone of fixed income investing. As interest rates decline, bond prices rise, leading to […]
Are you prepared?
In the ever-changing landscape of the financial market, investors are often faced with the challenge of navigating through the complexities of various investment options. In last week’s article, Eugene mentioned the critical concept of bond duration, and noted that investors should pay keen attention to this when looking to build a solid portfolio. With the […]
Fed Rate Cuts Are Imminent: Implications for Bond Investors
As the Federal Reserve moves closer to initiating a rate-cutting cycle, bond investors are reassessing their strategies. The Fed’s decision to hold rates steady in July was widely expected, but what caught the market’s attention was the growing possibility of rate cuts in the coming months. The July employment report, which showed a surprising rise […]
One one ‘CoCo’ full basket: Why Contingent Convertible Bonds Deserve a Spot in Your Portfolio.
Key Takeaways CoCo bonds (contingent convertible bonds) typically offer higher yields than traditional bonds, making them attractive to income-focused investors. Adding CoCos to a portfolio can enhance diversification and improve overall risk-adjusted returns. If a bank’s capital ratio falls below a certain threshold, CoCos convert into equity or are written down, helping stabilize the financial […]
Where and how to lock in your returns
Pros and Cons of higher interest rates: The past two years of high interest rates have had negative implications for many asset classes and inversely, presented many buying opportunities for investors. Locally, higher interest rates (and the tight Jamaican dollar liquidity conditions) translated to lower local equity valuations (and thus less “upside” potential). Higher interest rates […]
Weathering Market Turbulence with Bonds
Just as hurricane season acts as a reminder of the need to protect our homes from turbulent weather, each year investors face a familiar challenge: how to protect their portfolios amidst potential financial storms. Much like preparing for severe weather, smart investing involves fortifying your financial strategy to withstand market volatility. Bonds, which can be compared to […]
Fewer rate cuts, more opportunities
In last week’s article, Eugene spoke about the Federal Reserve’s recent decision to maintain its benchmark interest rate and reduce interest rate cut forecasts for this year. But what does this mean for investors and global bond holders? For the remainder of 2024, the global bond market is set for a potential shift as the […]
The Path to Policy Normalization in the U.S. Remains Uncertain
In the wake of the Federal Reserve’s recent decision to maintain its benchmark interest rate at a two-decade high of 5.25% to 5.5% and reduce rate cut forecasts for this year, the path to policy normalization in the United States remains fraught with uncertainty. The decision, reached by Fed officials, signals a cautious approach to […]
Invest in local currency and earn foreign currency
Invest in local currency and earn foreign currency? What sorcery is this?! Investing in assets that pay interest in a stronger currency while the principal investment is in a weaker or more volatile currency can be an effective investment strategy to hedge against devaluation risks- no sorcery or magic involved. This approach not only helps […]
Seize the Moment: Capitalize on Higher Interest Rates Now
The “Higher interest rates for longer” phenomenon in the US has created a brief window of opportunity for investors to lock in attractive yields that will outlast the current cycle. Investors can enjoy higher returns even when interest rates decline. On Friday May 31st, 2024, the 2-year US Treasury yielded 4.875% and the 10-year US […]
Be Protected: Know Your Covenants
In the world of bond investing, risk mitigation is critical, hence bond covenants serve as important safeguards of investor interests. These contractual agreements outline the terms and conditions of bond issuances, providing a framework to protect bondholders from potential risks and uncertainties. Among the myriad of bond covenants, change of control restrictions, ratings restrictions, and […]
Are Women Better Investors than Men?
While it’s important to note that individual investment strategies vary widely and should not be generalized based on gender, there have been some observed trends and differences in the way men and women approach investing. These differences are often influenced by a combination of social, psychological, and economic factors. The realm of finance and investment […]
Positioning your portfolio for changing interest rates
Throughout 2023 fixed income investors who were brave and had excess liquidity were able to take advantage of opportunities that arose in the bond market. Investors were able to add instruments that were investment grade at steep discounts. While some investors clutched their pearls, the brave stayed the course even as their portfolio value perhaps […]
A Full Guide to Callable Bonds
Key takeaways Callable bonds let issuers redeem before maturity at set call dates and prices. Investors earn higher coupons in exchange for call and reinvestment risk. The upside is capped when rates fall, while downside can soften when rates rise. Callable bonds This week, the Sterling report aims to introduce another common feature of fixed […]