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Can’t Get Enough Floating-Rate Debt? Big Funds Get Creative

TedTed
in The Bullpen
FYI: Floating-rate loans are white-hot. Prices are up, and supply is tight as investors seek protection from rising rates. So some of Wall Street’s biggest funds have turned to a workaround: They’re engineering their own floating-rate securities.

Managers at fund companies such as J.P. Morgan Asset Management and PGIM Fixed Income are ­increasingly mimicking the floating-coupon aspect by buying fixed-rate corporate bonds and using derivatives to hedge out the rate risk. The result is what some refer to as ­“synthetic floating-­rate” securities.
Regards,
Ted
https://www.bloomberg.com/news/articles/2017-06-15/can-t-get-enough-floating-rate-debt-big-funds-get-creative

M* Bank Loan Fund Returns:
http://news.morningstar.com/fund-category-returns/bank-loan/$foca$bl.aspx
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