The Federal Reserve, the Bank England and the European Central Bank have all held their interest rates this week and given out the same message that it is too early to be thinking about interest rate reductions. The equity and bond markets have decided that it is not, responding positively to a growing belief that the current rate-hiking cycle has peaked. Investment trusts are in demand again on this change in sentiment.
Relief rallies all round Having highlighted a potential turning point in my last set of comments, it seems that, having crawled over the wording of the latest central bank an...
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Some quick thoughts on developments last week. The US equity market is going into third quarter results season and the S&P 500 index has reached a critical point from a technical perspective.
Big picture macro It has been another tough week in the financial markets. The rise in the yield on the US 30-year bond to above 5%, its highest level since the summer of 2007, is an ominous development. While the yields on short-dated Treasuries are largely determined by the Federal Reserve's policy actions, the price of the so-called long bond is influenced more by the views of international marke...
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BioPharma Credit (ticker: BPCR) specialises in lending to life science firms. Most of its loans are at variable rates over five years and secured on revenues from already-approved products. It runs a concentrated portfolio that currently consists of just twelve loans. In addition to interest received, the trust gets significant income from prepayment and make-whole fees, as nearly all of its loans are repaid early. BioPharma raised around $1.4bn in its March 2017 IPO and three large follow-up fundraisings and it is by far the largest trust across the various debt sub-sectors. Its shares are pr...
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Our latest Q and A for premium subscribers is with Pedro Gonzalez de Cosia, the CEO of Pharmakon, the manager of BioPharma Credit, a specialist loan provider to life sciences companies. The trust has recently announced it is moving from the specialist segment to the main market in London. The trust is managed out of New York and was launched in March 2017, so is coming up shortly to its fifth anniversary. Given its 7.2% yield, it has been on my radar for a few weeks now as a candidate for the income portfolio (and my SIPP).
The Q and A recording is here.
In my own portfolios I have until r...
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