< The 2014 All-Europe Fixed-Income Research Team
The J.P. Morgan squad co-captained by Rishad Ahluwalia, 37, and Saul Doctor, 34, has dominated this sector since its 2012 introduction, in part because the strategists “are able to provide a good grasp of the entire structured credit market,” reports one advocate. Working from their bases in London and New York, the six researchers also “come up with smart and very timely trading ideas,” adds another supporter. Regulatory initiatives have been an ongoing concern over the past year. One example is the imminent overhaul of the credit default swaps market, which was prompted by investors’ seeking protection against “bonds being written down — particularly against governmental intervention,” says Doctor, who also leads a team that merits a runner-up position in Quantitative Analysis. New rules are expected to go into force in the third quarter. Other changes include Basel III banking requirements affecting credit-risk protection and risk ratios. In addition, clients are “struggling with lower yields and therefore fewer opportunities to make money from outright long-risk positions,” he notes. But “there’s still a lot of systemic risk priced into European products and European derivatives,” Doctor advises, so his team recommends various relative-value trades, including long-risk Europe and short-risk U.S. pairs. Optimism is also warranted in the European collateralized loan obligations market, whose issuance is set to double this year from 2013’s level of between €7 billion ($9.6 billion) and €8 billion, forecasts Ahluwalia. “The market has come back, to some extent,” he explains. “The investor base is gradually recovering, and some of the regulations that came into play during the crisis have become more accepted, more established and more understood.” Further, declining corporate default rates in Europe and the U.S. are stoking investor appetite for CLO tranches. |
