News

Refinitiv reported, “The U.S. leveraged loan market is back at full steam after a tumultuous year, with demand outweighing supply and investors eager to put their cash to work.” According to Refinitiv, “Several issuers have since taken this opportunity to re-launch transactions that were pulled last year, including retailer PetSmart, business information provider ION Analytics and marketing solutions provider Thryv.” Voya Investment Management Group Head and Chief Investment Officer of Senior Loans Jeff Bakalar said, “‘The market is wide open and more receptive than it was four to five months ago,’ ... pointing to the technical recovery that has taken place in the loan market over the last few weeks.” He also said that “issuers that were caught up with the coronavirus-driven market sentiment and could not capture a good deal, especially in the second half of 2020, are likely to return to the market.”

Bloomberg reported, “Collateralized loan obligation managers are expected to extend a run of frenzied sales this month” as “no less than seven new-issue CLOs are currently marketing” as well as “two refinancings and at least four so-called resets.” January’s new-issue volume of “nearly $9 billion” was “the highest for the month” as far back as “2013 when $8 billion was issued.” Bloomberg added, “Voya Investment Management sees good relative-value opportunity in CMBS conduits,” said Dave Goodson, head of securitized credit at Voya. According to Goodson, “Commercial real estate CLOs also represent a good opportunity and have a place in Voya’s portfolio,” but he also said that “Voya is bearish on CMBS deals with call options” though they “are a small but meaningful part of the CMBS universe.” Goodson said, “We are the most bullish right now on CMBS.”

MarketWatch reports that airlines are starting to use frequent flyer programs as “collateral for bondholders.” Airlines are making the pledges against their programs because they can generate cash by selling frequent flyer miles to credit card issuers, who, in turn “offer them as part of their reward programs to their customers.” The article says that “the revenues earned from selling the miles” to credit card issuers “are much higher than the cost of any flight travel redeemed by passengers.” Voya Investment Management Fixed Income Portfolio Manager Cliff Andrus said, “The customer doesn’t realize the margins are quite high.” According to the article, “Even with reduced demand for air travel, the mileage programs still hold their value.” Andrus said, “You’re going out to spend money on your credit card, whether or not you’re flying.” According to some analysts, using frequent flier programs as collateral “represents a desperate move by airlines that are looking for any assets that they can pledge.”

Pensions & Investments reports Voya spokesperson Kristopher Kagel confirmed that Voya Investment Management Managing Director and Head of Product Management and Development Bill Golden assumed Stephen Dougherty’s responsibilities as a managing director and head of structured assets and alternatives. Pensions & Investments mentions that “Dougherty was named global head of product at Aegon Asset Management.”

Bloomberg TV What’d You Miss? featured an interview with Voya Investment Management CEO Christine Hurtsellers, who discussed her thoughts on stock market performance and macroeconomic trends. According to Hurtsellers, the U.S. “still has a long way to go before” the economy returns to its pre-pandemic level, especially as the unemployment rate remains above 10%. However, Hurtsellers said that the “underlying fundamentals and momentum” of the economy “are actually quite good,” with “retail spending rebounding,” and more activity on the restaurant-reservation platform OpenTable. When asked about the relative strength of the stock market, and if the Fed’s liquidity actions are obscuring some risks to investors, Hurtsellers answered, “I would say, for the most part, no,” adding that “when you peel back the covers and look deeper into the market ... we are still seeing a tale of two cities, meaning that” some sectors, such as commercial real estate “have really lagged.”

Voya Chief Investment Officer for Fixed Income Matt Toms was on Bloomberg TV discussing debt markets and what factors are likely to have an impact in the future. Looking forward, Toms said, “in our view, it’s unlikely that [the Federal Reserve] needs to specifically use yield curve control ... the market is saying the Fed is near zero for an extended period, beyond 2-3 years all the way out to that 5 year bond. It’s only at the very back end with that 30 year where you see the real steepening, so bond markets are saying we could stay at a low level for a very long time.”

Voya Investment Management Head of Securitized Dave Goodson was quoted by GlobalCapital as it looks at how the pandemic and subsequent economic shock have impacted the asset-backed securities market. Many asset issuers have adopted forbearance as “an integral part of ... relief plans to buy some time for their clients to recover.” However, Goodson believes that it remains unclear what direction the economic recovery will take and “the key question is how forbearance translates into real, observed delinquencies” in the market. Looking at specific sectors such as aviation that have been particularly hard hit, Goodson believes that “there will be a return to normal at some point when a vaccine arrives, but the road to that point will be difficult.”

Voya Investment Management Chief Investment Officer for Multi-Asset Strategies Paul Zemsky was on MoneyLife With Chuck Jaffe discussing stock and bond markets. Zemsky believes that with the market near record highs despite earnings that are below expectations, it’s not surprising that many observers think that stocks are overvalued now. He doesn’t see things that way, however, noting that stocks are a good opportunity – especially small caps and international stocks which have been the laggards in the recent rally – while lightening up on bonds, except for corporates where he sees some improved return potential ahead.

Traders Magazine reports, “The retail investor, John Q. Public, has made his presence felt in the equity market structure.” Citadel Securities Head of Execution Services Joe Mecane “said that the new COVID-19 environment ... helped spur retail trading and coupled with institutional order flow, tested market resiliency.” Senior Quantitative Trader and Head of Market Structure at Voya Investment Management Enrico Cacciatore “confirmed Mecane’s assessment that the boost in trading activity was coming from Mom and Pop investors taking advantage of zero-commission fees charged by the major e-brokerages.” Cacciatore said, “Retail, from my vantage point, has been the driver in volume here. You could see the exponential growth on the TRF to prove this. During the crisis, institutions were positioning themselves using passive strategies and repositioning based on returns. Despite this, the activity levels were still more retail-oriented.”

Voya Investment Management Head of Securitized Products Dave Goodson recently spoke with the Debtwire podcast about investment opportunities in the securitized products sector, including CMBS, RMBS and consumer ABS. Dave provided a detailed assessment of many product categories during the nearly 30 minute discussion. According to Goodson, “there’s so much going on in the market now. Things are so uncertain and evolving so rapidly that you can’t take your eye off of any of the balls in the air right now.” Continuing, Goodson said, “probably where we see the most hour-to-hour developments that impact our risk-taking would be in the CMBS market. That space became extremely dislocated in March and into early April. Things have started unthawing and we’ve come back a bit ... but we’re still monitoring every remittance report that comes in for information and for potential clues to the longer-term outlook.”