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Financing Year in Review: The Tide Turns

Harvard Corporate Governance

2022 brought a halt to a nearly unabated 12-year run of booming credit markets and “lower for longer” interest rates. This post is based on a Wachtell Lipton memorandum by Mr. Sobolewski, Mr. Pessin, Mr. Simwinga, Joshua Feltman , Michael Benn , and Emily Johnson. Average yields for single-B bonds rose from under 4.7%

Finance 231
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Country Risk: A 2022 Mid-year Update!

Musings on Markets

Country Risk: Default Risk and Ratings For investors, the most direct measures of country risk come from measures of their capacity to default on their borrowings. That increase in interest rates is not restricted to the US dollar, as local currency government bond rates have risen around the world.

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In Search of Safe Havens: The Trust Deficit and Risk-free Investments!

Musings on Markets

In every introductory finance class, you begin with the notion of a risk-free investment, and the rate on that investment becomes the base on which you build, to get to expected returns on risky assets and investments. What is a risk free investment? Why does the risk-free rate matter?

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Data Update 4 for 2022: Risk = Danger + Opportunity!

Musings on Markets

In the first few weeks of 2022, we have had repeated reminders from the market that risk never goes away for good, even in the most buoyant markets, and that when it returns, investors still seem to be surprised that it is there.

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Sovereign Ratings, Default Risk and Markets: The Moody's Downgrade Aftermath!

Musings on Markets

The heat map below provides the sovereign ratings, from Moody's, for all rated countries the start of 2025: Moody's sovereign ratings Note that the greyed out countries are unrated, with Russia being the most significant example; the ratings agencies withdrew their rating for Russia in 2022 and not reinstated it yet.

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Data Update 3: Inflation and its Ripple Effects!

Musings on Markets

By the end of 2021, it was clear that this bout of inflation was not as transient a phenomenon as some had made it out to be, and the big question leading in 2022, for investors and markets, is how inflation will play out during the year, and beyond, and the consequences for stocks, bonds and currencies.

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Data Update 3 for 2023: Inflation and Interest Rates

Musings on Markets

If 2022 was an unsettling year for equities, as I noted in my second data post, it was an even more tumultuous year for the bond market. That is good advice in most years, but 2022 was not one of those years. Since inflation was 6.42% in 2022, the real return on a US 10-year treasury bond was -22.79%.