Three in Five with
Elaad Keren

In this issue, we discuss cooling inflation, decreasing liquidity in real return bonds (RRB), and alternatives to RRBs in inflation hedging.

Welcome to SLC Management’s investment outlook for the mid-year point of 2024. Learn more about what our investment teams and solutions providers expect for public and private fixed income, real estate, infrastructure, insurers and retirement plans.

SLC Management joined this year’s Pensions & Investments Canadian Pension Risk Strategies (CRISK) events to share insights and help institutional investors navigate the complexities of private markets.

In this issue, we discuss cooling inflation, decreasing liquidity in real return bonds (RRB), and why the cost of implementing a U.S. based inflation strategy has increased.

Market statistics for the private placement market sourced from Private Placement Monitor, a standard proxy for the IG private credit market.

Robust volumes, greater demand from a growing investor base and tightening spreads characterized private credit during the first quarter. New investors coming into the market has also led to increased market capacity and larger deal sizes. Meanwhile, fund finance has emerged as a growing, evolving sector for institutional investors looking for potential diversification, investment premiums and risk managed performance.

At the beginning of 2024 there was little solid consensus on the direction of interest rates. Expectations for federal bank actions ranged from rate decreases for earlier in the year to rates remaining high until at least 2025. Such uncertainty can make things difficult for fixed income investors, as in many cases bond yields are highly correlated to interest rates.

Investment grade (IG) private credit volume in Q4 2023 was the strongest for the year at US$28.6 billion, bouncing back from US$14.1 billion in Q3 2023, the lowest quarterly volume of the year. While we won’t know final results for a few months, preliminary 2023 volume of US$90.7 billion fell short of US$92.3 billion in 2022. Issuers that had something to get done came to market in the last quarter and investors responded positively. This was in contrast to much of 2023 when issuers were put off by high rates or market uncertainty and investors were either less liquid or more cautious immediately after the failure of Silicon Valley Bank.

Welcome to SLC Management’s investment outlook for 2024. In this report, our investment teams and solutions providers discuss public and private fixed income, real estate, infrastructure, insurance asset management and retirement plans.

In this issue, we discuss accelerating core inflation measures, decreasing liquidity in real return bonds (RRB), and why market conditions have improved for implementing a U.S. based inflation strategy.

A volatile economic and market environment has led to increased interest among institutional investors for more diversified credit exposure. One segment of the credit market that’s often overlooked is the narrowly syndicated credit (NSC) space, which can offer the potential for higher yields with reduced volatility characteristics.

In this issue, we discuss the continued increase in headline CPI, a burst in RRB trading volume in Q3, and why implementing a U.S. based inflationary strategy could be expensive for Canadian investors.

In a slow quarter for the investment grade (IG) private credit market, robust industrial and utility sector issuance helped support volume amid decreased financial issuance. We are seeing a possible turnaround in decreasing IG private credit demand to date as markets begin to adopt “higher for longer” rate expectations. Meanwhile, we are taking a closer look at infrastructure debt investments amid increased focus on the diversification, risk management and other potential benefits of the asset class.

In this issue, we discuss the unexpected increase in headline CPI in July and the significant decrease in RRB trading volume.

Issuance of investment grade private credit (IG private credit) proved resilient in Q2 2023, with the market providing some respite during uncertainty in the public debt space. H1 2023 issuance, however, is still behind that of the same period last year, largely due to a decrease in volume in financials. Amid other promising sectors, we see potential value in asset-backed securities (ABS), in particular senior IG ABS. From a volume and return perspective, 2023 could be an especially strong year for ABS investors, in our view.  

Welcome to SLC Management’s investment outlook for mid-year 2023. In this report, our investment teams and solutions providers share their insights, analyses and perspectives on public and private fixed income, real estate, infrastructure, insurance asset management and retirement plans.

Issuance for 2023 started off on a strong footing with robust volumes in Q1, which was down somewhat from 2022 but stronger than 2021 for the comparable time periods. Financial issuance for Q1 2023 was down significantly year over year, but was partially offset by strong robust volumes from industrial, utility and transportation. With continuing uncertainty around the market – from inflation, interest rates and turmoil in the banking sector – investment grade private credit (IG private credit) is exhibiting the risk/return characteristics investors might be looking for.

In this quarter's issue, we discuss the decrease in headline CPI year-over-year and provide an update on the active secondary RRB market.

On March 28, Finance Minister Chrystia Freeland tabled the federal budget in the House of Commons. The budget contained an unexpected new tax measure for dividends that directly impacts financial institutions, including insurance companies.

Treasury and credit markets returned 3% in January, according to the Bloomberg US Aggregate Index, following outsized negative returns for fixed income in 2022. Investors feel optimistic about fixed income performance as inflation cools and central banks get closer to a pause in their tightening activities.

Issuance in Q4 was an improvement from the previous quarter, but lagged year on year. In total, 2022 is expected to be either the second or third largest issuance year on record, albeit behind a record-setting 2021. The issuance pipeline in 2023 could be more uncertain due to rising rates and recession concerns, although volumes could be aided by postponed deals from 2022 transpiring in the new year. Amid increased interest in private credit, we offer insights into the specialized operational nature of these investments. 

With inflation on the rise, we'd like to share our investment team's latest insights on changes in the CPI and Canada's headline CPI contribution year-over-year, the break-even inflation rate and curve, and real return bonds on a quarterly basis. This overview includes commentary from Steven Morris, Senior Managing Director and Portfolio Manager at SLC Management.

We are pleased to present SLC Management’s investment outlook for 2023. This report reflects the diverse viewpoints of our investment teams and solutions providers, with analyses of public and private fixed income, real estate, infrastructure, insurance asset management and retirement plans.

Steve Guignard, Senior Director of Client Solutions discussed the merits of alternative fixed income at the Canadian Investment Review’s Investment Innovation Conference. 

2022 marks a historically poor year for Treasury and credit markets, dominated by aggressive tightening by the U.S. Federal Reserve in efforts to moderate inflation.

Treasury and credit markets continue to be highly volatile, with inflation, aggressive central bank action and recession fears dominating headlines. However, we continue to take advantage of market volatility though security selection and relative value trading.

Treasury and credit markets continued to be highly volatile in October thanks to a combination of inflation, aggressive central bank actions and recession concerns. These conditions, however, meant continued opportunities for the Multi-Asset Credit strategy group.

Issuance in Q3 was weaker amid the rise in interest rates and market volatility. However, we are also seeing interesting opportunities emerge among sound European and U.K. issuers looking outside their regional public bond markets. And as October action winds up in the world of professional sports, we are reminded of the select robust private credit opportunities in this market.

Following the Government of Canada’s decision last week to cease issuance of real return bonds (RRBs), we’ve spoken to a number of dealers to understand the impact of this move. More broadly, we’ve heard that the overall tone is less liquidity, and dealers anticipate less trading. In a few cases, we’ve heard of index fund managers rebalancing their portfolios (primarily trading 50s and 54s). Some dealers’ clients commented that if there were distressed sellers, they would be better buyers. However, there have been no distressed sellers. Overall, recent weeks have been very quiet for RRBs.

The third quarter of 2022 was a continuation of the challenges seen all year as the U.S. Fed continued to combat inflation with significant rate increases, the ongoing conflict in Ukraine and deteriorating global growth prospects.

With inflation on the rise, we'd like to share our investment team's latest insights on changes in the CPI and Canada's headline CPI contribution year-over-year, the break-even inflation rate and curve, and real return bonds on a quarterly basis. This overview includes commentary from Steven Morris, Senior Managing Director and Portfolio Manager at SLC Management.

Yesterday’s announcement about real return bond issuance was shocking and we’re writing to share thoughts from Steve Morris, Senior Managing Director & Portfolio Manager and Ashwin Gopwani, Managing Director and Head of Canadian Client Solutions.

In this extraordinary time of market transition, private credit appears uniquely positioned to remain resilient and capitalize on compelling investment opportunities and higher returns generated by volatility and dislocations in the public markets.

We are pleased to present our first-ever mid-year investment outlook for 2022. This report includes our macroeconomic views for the rest of the year, as well as our expectations for public and private fixed income, real estate, infrastructure, insurance asset management, and retirement plan solutions.

BentallGreenOak recently released its 2022 Corporate Responsibility Summary, which highlights the organizations’ approach to ESG, diversity, equity and inclusion, as well as philanthropy.

With inflation on the rise, we'd like to share our investment team's latest insights on changes in the CPI, the break-even inflation rate, and real return bonds on a quarterly basis. This overview includes commentary from Steven Morris, Senior Managing Director and Portfolio Manager at SLC Management. 

As recession is front of mind for investors across the globe, we believe now is the time for bond buyers to reconsider municipals.

Pension plan sponsors may have a unique opportunity to take advantage of higher yields and protect against future interest rate moves.

SLC Management and Sun Life’s Defined Benefit Solutions are excited to join this year’s Pensions & Investments Canadian Pension Risk Strategies (CRISK) events. Along with other sponsoring partners, we’ll share insights to help you take action.

Learn more about three rising rates considerations for fixed income investors.

The first quarter of 2022 saw extreme volatility in public fixed income markets. However, amidst this surging volatility, private credit market issuance has remained steady due to the unique supply/demand dynamics of the market. 

With inflation on the rise, our investment team's share their latest insights on changes in the CPI, the break-even inflation rate, and real return bonds. We also discuss the upside to inflation risks short and long term, as well as attractive pricing in real return bonds for indexed plans, updated to include developments in January 2022.

The largest pension plans have been using leverage and derivatives to manage asset liability risk for decades. Technology, experience, and increasing familiarity have brought the use of leverage and derivatives to the mainstream. 

With inflation on the rise, we'd like to share our investment team's latest insights on changes in the CPI, the break-even inflation rate, and real return bonds. This overview includes commentary from Steven Morris, Senior Managing Director and Portfolio Manager at SLC Management. In our March 2022 issue, we discuss the recent rise in market inflation expectations and implications for indexed plans considering purchasing inflation protection. 

BentallGreenOak discusses the decline of the pandemic and resultant economic expansion; digitization and technological disruption;  demographics, labor, and housing affordability; and how all these forces are driving and disrupting the real estate space.

In the midst of economic transition, investors continue to seek out private credit for its attractive risk-return profile, consistent yield premium to public fixed income markets, and low default rates. What does this period of change and volatility mean for a private credit manager? And what should investors be on the lookout for when evaluating private credit opportunities in today’s market?

Randy Brown, Chief Investment Officer at Sun Life & Head of Insurance Asset Management at SLC Management, provides his thoughts on how the Russia/Ukraine conflict is impacting our global macro views.

Learn how the asset class performed in Q4 2021, the outlook for Q1 2022 and how issuance and new buyers were key trends in 2021, and our thoughts on the market in 2022.

After spending most of 2021 wondering if inflation would be transitory or persistent, consensus thinking as we begin 2022 is that it is here to stay. With insurers likely to feel the pain on both sides of their balance sheets if inflation remains elevated, it’s no surprise that this topic is top of mind for insurance investment staff as they assess how to position their portfolios in preparation of this growing threat.