Latest news with #post-GFC
Business Wire
5 days ago
- Business
- Business Wire
KBRA Releases Research – Private Credit: A Source of Systemic Strength
NEW YORK--(BUSINESS WIRE)--KBRA releases research examining private credit's role as a source of systemic strength, tracing its history, function, and evolving contours of risk. Given private credit's rapid growth, coupled with an economy potentially on the verge of a credit cycle, the increased attention and scrutiny on the industry is warranted. However, KBRA notes that some of the press coverage and market research regarding private credit is often ungrounded in data or lacking a nuanced understanding of how the market evolved and functions. Most notably, much of the research from traditionally public market sources has overlooked how private credit diffuses, rather than amplifies, risk to the global financial system. This paper focuses on the roughly $1.6 trillion direct lending portion of the private credit market. We explore the reasons behind the segment's rapid growth—detailing how this is the direct and intended result of post-global financial crisis (GFC) regulatory actions—and outline why we believe the outcome has bolstered systemic strength. The paper also highlights the industry's evolving contours of risk, as well as likely mitigants, involving the large quantity of dry powder and expansion into new asset categories, geographies, and investor types. Key Takeaways KBRA believes private credit has reduced systemic risk relative to what would have occurred without its presence in the following ways: Private markets were poised to grow. While one could argue the degree of this growth may have been partly fueled by the presence of private lenders, one could also argue that growth was inevitable. Without private credit and the regulatory environment that fueled it, much of the rise in lending to growth or highly leveraged middle market (MM) companies within private markets would likely have been curtailed if financing was limited to banks and traditional commercial finance companies. Instead, the risks involved with growth or leveraged MM lending have been diffused away from depositor-funded systemically interconnected banks and market-sensitive finance companies to thousands of globally distributed, highly capitalized, long-term institutional investors—consistent with what global banking regulators intended in the wake of the GFC. Further, when MM borrowers default, institutional investors absorb those losses through reduced returns on a relatively small portion of their portfolios—which is a much better shock absorber than capital-sensitive bank balance sheets dependent on high degrees of leverage. KBRA also notes that private credit managers are better positioned to maximize recoveries and limit contagion given they are rarely forced sellers. And in any event, we are confident that these losses remain distant and well insulated from bank depositors and taxpayers. In parallel, banks continue to participate in the recent rapid expansion of private markets in a mostly less risky format than would have occurred without the post-GFC regulations. Their exposure has been largely limited to senior secured positions in overcollateralized portfolios, such as secured credit facilities to funds or business development companies. KBRA views this as a significant net positive for the financial system. As its name implies, private credit may seem opaque—but in reality, private credit data is easily accessible to the stakeholders in each credit or investment vehicle. Those with a large, long-term vested interest have exceptional transparency that allows continuous monitoring and more informed decision-making around potential risks, while outsiders, by design, do not. That all said, we do see the contours of risk evolving in three ways across the private credit landscape: We expect the MM borrower default rate over the next 24 months will likely increase relative to the rates observed over the past decade. This may cause operational challenges at times for some private credit platforms and a wider dispersion of performance. Meanwhile, many private credit lenders are extending their reach into wider categories of debt and broader geographies; since not all platforms have experience in these areas, this could result in some overreach and accumulation of additional risk not previously managed by some. Growth is also coming in the expanding breadth of investor categories, especially the rapid pursuit of retail channels. This will invite closer regulatory scrutiny and more consequential headline risk. Click here to view the report. Recent Publications About KBRA KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions. Doc ID: 1010104
Perth Now
04-07-2025
- Business
- Perth Now
US dollar collapse sparks rate cut hopes
A 'couple of storm fronts coming out of the US' has seen the Australian dollar soar in recent weeks, adding further pressure on the RBA to cut interest rates. Australia's dollar hit an eight month high against the US dollar on the back of greenback having its worst start to a year since 1973. A host of economic policies, which is adding to a budget deficit already running at 7 per cent of GDP, has investors in the US dollar fearing it will be unable to pay its money back. Webull securities Australia chief executive Rob Talevski said the RBA will be closely watching the fallout from the latest Trump development. 'We have a couple of storm fronts coming out of the US in the scene of the big beautiful bill but also a depreciating US dollar and questions of the independence of the Fed. 'This obviously has ramifications for the rest of the world and one the RBA will be taking note of. 'Ultimately, the RBA will be cautious, but for the short-term there's plenty of reasons for the RBA to cut in July,' he said. DRAG ON THE AUSSIE ECONOMY While a rising Aussie dollar against the US is good for travellers and those buying from overseas, it could have a massive impact on the Australian economy. Australia's three major sectors are raw materials exports, tourism and international education at universities which all come under pressure with a rising Australian dollar. The Australian dollar is jumping on the back of this. NewsWire / Nicholas Eagar Credit: NCA NewsWire While conceding a couple of rate cuts won't alone solve Australia's economic problems, Mr Taleski says it adds to a chance of a rate cut 'Obviously the Australian dollar is a commodity dollar and that is the sector that will be impacted. 'We've already seen a slowdown in tourism and international education with a strengthening Aussie dollar likely to harm us. 'It is definitely something the RBA will be monitoring closely. According to Mr Talevski combined the falls in mining revenues, tourism and education will see the Australian economy stall over the next 12-months. NED-9175-Australia's GDP Unemployment Figures He also opines this adds more pressure on the RBA which would be wise to consider the mounting risk that a falling US-dollar has on the global economy. 'Brand USA has been an impeccable defence in the face of mounting economic challenges in recent decades – sustaining global investor trust throughout the massive post-GFC monetary expansion and a deteriorating fiscal trajectory is not a luxury that would be afforded to any other country on earth,' he said. Mr Talevski said the RBA acting a bit quicker and cutting rates in July could help with some of the pain from a higher Australian dollar. 'If we look back and analyse the RBA historically, the main criticism is that they are very slow to react whether it is increasing or decreasing monetary policy.' 'Information flows really quickly whether it is good or bad so reactions from that need to be a lot quicker than we've seen the RBA perform. BIG BEAUTIFUL BILL The latest storm facing the US dollar US President Donald Trump's passing his signature bill through the US House of Representatives by four votes on Friday overnight. Dubbed the 'big beautiful bill' will do a host of things including fund a crackdown on immigration, pass his 2017 tax cuts, no more taxes on tips, cut credits or clean energy and EVs, state and local tax deductions as well as cut social safety net programs. Republicans said the legislation would lower taxes for Americans across the income spectrum and will help spur on economic growth. Critics say it gives the top 1 per cent of US households with incomes of more than $917,000 will get a $66,000 tax cut or about 2.4 per cent of their income. Going along with the bill will be cut to medicaid and food stamps meant for lower income earners. Overall the tax cuts will add $US3.4 trillion to the national debt between 2025 to 2034, adding to the US current $36.2 trillion national debt according to the nonpartisan Congressional Budget Office. Mr Trump cheered the passing of the big beautiful bill on Truth Social. 'One of the most consequential Bills ever. The USA is the 'HOTTEST' Country in the World, by far!!!' Mr Trump wrote. AMP chief economist Shane Oliver said the economic impact of this bill will be ambiguous. 'On the one hand the tax cuts likely provide a supply side boost to the economy, partly offsetting the negative supply side impact of the tariffs,' he wrote in his economic note. 'It may provide some near-term stimulus via the front loading of tax cuts but again this is at least partly offset by the tariffs. 'And with the income tax cuts being skewed to the rich (who don't change their spending much) and the spending cuts skewed to low-income earners it may mean that it could act as a drag on growth.' But over the longer-term Dr Oliver conceded it will add further pressure on the federal debt levels.
Yahoo
24-06-2025
- Business
- Yahoo
MarketAxess Holdings Inc. (MKTX): A Bull Case Theory
We came across a bullish thesis on MarketAxess Holdings Inc. (MKTX) on DIY Investor's Substack. In this article, we will summarize the bulls' thesis on MKTX. MarketAxess Holdings Inc. (MKTX)'s share was trading at $224.44 as of 10th June. MKTX's trailing and forward P/E were 38.76 and 29.41 respectively according to Yahoo Finance. A close-up of a computer monitor, showing the interface of a financial trading platform. MarketAxess Holdings (MKTX) is a dominant force in electronic fixed income trading, specializing in credit products such as U.S. investment-grade, high-yield, Eurobonds, and emerging market debt, with expansion into Treasuries and municipal bonds through strategic acquisitions like LiquidityEdge and MuniBrokers. The company has also diversified into regulatory services via the Regulatory Reporting Hub. Historically treated as a GARP stock, MKTX traded around 30 P/E with 33% growth post-GFC, peaking at a stretched 73 P/E in 2020. Today, it trades at a more grounded 30 P/E with expected 12% annual growth over the next three years, pricing in solid yet reasonable expectations. Based on consensus EPS estimates for 2025 and 2026, the stock's fair value is $243—an 8% premium to the current price of $223, offering a 15% annual return if valuation holds steady. Morningstar echoes this with a $260 fair value, citing a wide moat, exemplary management, and high uncertainty. MKTX's economic moat stems from strong network effects, embedded client workflows, proprietary trading protocols, and an unmatched dealer-client ecosystem supporting its Open Trading platform. Its specialization in illiquid and fragmented markets gives it efficient scale, while high operating leverage fuels ongoing R&D without sacrificing margins. Despite some risks, primarily transaction volume volatility and reliance on variable fees- its global reach and countercyclical traits provide balance. Capital allocation has been disciplined, with $540M in cash, no long-term debt, and prudent buybacks. Selective M&A and consistent investment in machine learning and trading protocols show a forward-looking strategy. Overall, MKTX presents a resilient, moaty business with attractive upside. Previously, we covered a bullish thesis on Robinhood (HOOD) from Chit Chat Stocks, which acknowledged the platform's controversial reputation while emphasizing its explosive asset growth and under-monetized user base as drivers of long-term upside. In contrast, DIY Investor's thesis on MarketAxess (MKTX) champions a more conventional compounder—a moaty, capital-efficient platform with embedded workflows, steady growth, and network effects—offering a fundamentally sound, lower-volatility path to long-term returns. MarketAxess Holdings Inc. (MKTX) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held MKTX at the end of the first quarter which was 45 in the previous quarter. While we acknowledge the risk and potential of MKTX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. This article was originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
NZ Herald
14-06-2025
- Business
- NZ Herald
We need to fix the human-shaped hole in our economy
Specifically, I mean the flow of humans across our border. We are a very small country, with a total population the size of Sydney. So, whether it's tourists or immigrants, the fluctuations in the number of people leaving and entering the country have an outsized impact. When the numbers fall dramatically, as they have done, we feel it acutely. There is a human-shaped hole in our economic recovery. We had more good news out of the primary sector last week. A Government report forecast primary sector export earnings will hit $59.9 billion in the June 2025 year – $3b higher than was projected in December. That's a big stimulatory boost on top of already strong earnings. But we had more bad news out of the retail sector. Electronic card transaction data for May showed consumers are still feeling cautious. We should have had more money in our pockets thanks to lower petrol prices and lower interest rates. But core spending (which excludes fuel) was down 0.2% in May, with falls for durables and consumer goods. Hospitality and apparel were basically flat, up just 0.1%. There really aren't any obvious signs of recovery there for the beleaguered Auckland CBD. It's a tale of two economies, and there's a big divide opening up. It would be interesting to compare and contrast the vibe at Fieldays this weekend with that on Queen St. Last week, we also saw the release of new immigration and tourism data. These provided a timely reminder of what the missing pieces of this economic recovery are. Our annual net migration gain dipped to just 21,300. That's still population growth and I suppose we should be thankful for it. However, if we put aside the Covid years when the borders were closed, it is the country's lowest rate of population growth since January 2014. Back then, things were building up again after a post-GFC exodus. Since then, our economy has grown used to running with high levels of net migration gain. From 2015, it ran between 50,000 and 70,000, which everyone thought was pretty wild at the time. But after we opened the borders post-Covid, things really took off. New Zealand's net migration gain soared to a record peak of 138,000 in the year to October 2023. It pushed the economy to the limits of its ability to cope. But it also meant unprecedented demand for housing, cars, furnishings and all sorts of other retail goods. Every new immigrant has to live somewhere. Most drive cars. So the big fall in numbers – a combination of fewer arrivals and record departures – puts a huge dent in demand relative to where the economy has become used to operating. Then there is tourism. New Zealand had about 3.6 million overseas visitors in the year to April. That's a big number relative to our population and illustrates just how important tourism is to the economy. But it should be much bigger. Stats NZ points out that the visitors in April 2025 represent just 86% of the total we got in April 2019. Not only have we not yet returned to pre-Covid levels, but the current trend suggests we aren't about to any time soon. The tourist spending deficit looks even worse for our economy if we assume that, without the big Covid break, we might have achieved some degree of growth in the past five years or so. What can we do to address this human-shaped hole in the economy? Clearly, the Government is well aware of the problem. We saw two new policies unveiled last week to try to shift the dial. On the tourism front, it was back to the future with the $5.5 million reboot of the '100% Pure' marketing campaign around the world. That successful slogan was ditched in 2022 for 'If You Seek', which doesn't seem to have made much impact. That change is unlikely to shift the dial massively. The big issue with tourist numbers right now is the drop-off in Chinese visitors. The consumer end of the Chinese economy has been struggling too, and New Zealand is an expensive place to visit. Prime Minister Christopher Luxon will be hoping he can drum up some renewed hype about New Zealand when he visits China late this month. Based on our relationship with China though, and the surge in tourist interest after the free trade deal in 2008, the real key to a renewed tourist boom likely lies with India and the publicity a free trade deal there might bring. On the immigration front, the Government has introduced a new Parent Boost policy, which will enable the parents of immigrants to stay for up to 10 years. That should add to the appeal of New Zealand for many migrants. But the reality is most immigration is driven by economic factors. Immigrant numbers are unlikely to pick up until our job market does, which means we can't rely on it to drive growth in the short term. It's probably good for our economy to sweat it out with lower than average net migration for a while. House prices are balancing out, and this provides a chance for infrastructure planning and building to catch up. But we need to turn the trend around soon. We especially need to stop the youngest and brightest Kiwi workers from departing in high numbers. The boom and bust cycles we seem to perpetually swing through are no good for long-term stability. The goal of this Government and the next should be to encourage a steady pace of population growth, perhaps in the range of 30,000-40,000 net gain per year. Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.
Yahoo
14-06-2025
- Business
- Yahoo
Bank of America Bullish on Goldman Sachs, Predicts Surge to $700
The Goldman Sachs Group, Inc. (NYSE:GS) is one of the best stocks for a retirement stock portfolio. On June 12, Bank of America reaffirmed its Buy rating on Goldman Sachs, highlighting the firm's ability to evolve with changing conditions, describing it as having 'proven DNA to adapt to an ever-changing world.' A close-up of a financial advisor giving advice to a customer, demonstrating the importance of consumer and wealth management. The bank set a price target of $700 per share, suggesting a 12% gain from June 11's closing price of $624.17. Analyst Ebrahim Poonawala noted The Goldman Sachs Group, Inc. (NYSE:GS)'s long track record of weathering challenging periods, pointing to the Paul Volcker era at the Federal Reserve and the 2008 financial crisis as moments that showcased 'a strong combination of scale and flexibility.' Poonawala made the following comment: 'A sea change in the macro backdrop (interest rates, geopolitics) vs. post-GFC [Great Financial Crisis] years combined with a strategy that is focused on deepening client relationships (via financing) has increased the resiliency of trading revenues.' He also projected ongoing strength in The Goldman Sachs Group, Inc. (NYSE:GS)'s trading revenue, which stood out in the bank's latest quarterly results. The analyst further stated: 'Goldman's presence in the private credit space dating back to the mid-90s, history of strong risk management (superior client selection) should reduce the risk from any potential credit volatility in this space.' GS has surged by nearly 7% since the start of 2025. While we acknowledge the potential of GS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and Disclosure. None. Sign in to access your portfolio
