What Bond Investors Want

Fixed-income investors demand transparency from corporate bond issuers – and the best investor relations teams give it to them.

Buy-side analysts and money managers surveyed by Institutional Investor listed their favorite companies for the first ever All-America Fixed Income Investor Relations ranking, judging performance based on characteristics such as how companies use debt and how much information IR Departments shared with investors. The most important quality for investors, based on their votes, is how forthcoming IR professionals were regarding their company's financial health and balance sheet.

Among the top firms for fixed-income investor relations were JPMorgan Chase & Co., Ford Motors Co., Macy’s, and Bausch Health Companies (formerly Valeant Pharmaceuticals), which each won in their respective sectors.

To determine the winners, Institutional Investor surveyed buy-side analysts and money managers at financial institutions that invest in the U.S., including those who cast votes in this year’s All-America Fixed-Income Research Team. Over 850 investment professionals from 340 firms participated.

The voters were asked to rank the companies based on four attributes: being forthcoming with the financial health and balance sheet; transparency regarding prospective negative financial events; transparency regarding key calculations related to contractual provisions such as debt covenants; and prudent, value creating use of debt. 

With JPMorgan, which placed first in the large-cap banking sector, investors were impressed by the firm’s openness and reliability, although they still had questions about who would succeed Jamie Dimon as the bank’s chief executive. JPMorgan’s research capabilities were also a plus for voters, but some requested “more timely analysis” – a critique also given to competitor Citigroup, which placed second in the category. Bank of America Corp. ranked third.

In the auto sector, Ford Motor Co. ranked first, thanks to its “excellent outreach to fixed-income investors,” according to one respondent. General Motors ranked second in that category, receiving praise for its “detailed explanations and reconciliation of non-GAAP financials” despite comparatively “weak” investor outreach. Third place went to Tesla.

In the retail and department sector, transparency remained a key focus for fixed-income investors. One voter said they appreciated that first-place Macy’s has “not shied away from alerting analysts to challenging quarters.” However, another noted that while Macy’s is forthcoming with its issues, it still needs to work on solutions for them. In this sector, J.C. Penney Co. ranked second, and Tailored Brands placed third.

Placing first in the pharmaceutical sector was Valeant, which recently rebranded as Bausch Health Companies. Voters said they appreciated Bausch Health’s new management, which stepped up after a series of scandals at the drugmaker: In 2015, a federal subpoena into Bausch Health's drug-pricing strategy, coupled with questionable ties to pharmacy benefit manager Philidor, led to a nearly 60 percent decline in stock value.

“New management has improved disclosure significantly,” one voter said. Another said they appreciated the “clear articulation” of Bausch Health’s asset sale program and debt reduction plan. 

The company beat out Johnson & Johnson, which placed second in the sector, and Mylan, which was ranked third. 

Other winners in their sector categories included Huntsman Corp., General Electric Co., Deere & Co., Newell Brands, Tyson Foods, MGM Resorts International, Duke Energy Corp., Enterprise Products Partners, Diamondback Energy, Morgan Stanley, Berkshire Hathaway, Simon Property Group, CVS Health Corp., HCA Healthcare, Comcast Corp., Alphabet, Apple, IBM Corp., Micron Technology, and T-Mobile.