Bond markets worldwide have been pressured for months, sending yields to multi-decade highs as the Iran war raised energy prices and as investors fret about government spending. To complicate things further, central banks are raising their interest rates as well.

High yields mean bond prices are falling.

The United States, known for possessing the world’s deepest and most influential government bond market, is witnessing a massive selloff. The yield on 30-year Treasury bonds climbed to 5.48%, highest since 2004, on Thursday, while the benchmark US 10-year yield reached 5.20%.

To date, investors have absorbed the rise in yields given the resilience of underlying economic growth, booming corporate profits, and increasing spending, led by ⁠the AI boom.

The 10-year Treasury yield breached the 5% mark in September. Investors are now preparing themselves to see the ratio crossing the 6% milestone, which could increase the pain further for the global financial markets and corporate America.

Breaching the 6% milestone will only result in elevated borrowing costs squeezing consumers ahead of the midterm elections.

In the world’s largest economy, 30-year mortgage rates are now a percentage point higher than before the Iran war and, at 7%, are around their highest in two years.

The 10-year yield has risen 0.70 percentage points since the Federal Reserve policy meeting in June and 1.25 percentage points since early March.

“The vast majority of the move higher in yields since March has been driven by rising Fed expectations, with the remainder driven by a combination of rising growth expectations and higher oil prices,” said Gennadiy Goldberg, head of US rates strategy at TD Securities, in a research note.

Recent business activity data indicating strong US growth and rising inflation pressures has raised the chances of the Kevin Warsh-led Federal Reserve possibly hiking rates further.

While ‌shorter-dated Treasury ⁠yields track expectations for interest rates, the 30-year yield reflects investors’ willingness to finance government borrowing in the years ahead.

Along with the United States, the major global economies are grappling with higher interest payments as well, with spending and lending demands surging steadily at the government, business, and household levels.

Germany’s finance agency now expects federal borrowing to ⁠hit a record 525.5 billion euro (USD 598 billion) in 2026 and to rise further in 2027, driven largely by rising refinancing needs and growing requirements for special funds.

The yield on Germany’s benchmark 10-year Bund briefly rose above 3.6% in September, its highest level in 17 years.

Japan’s 10-year bond yield on Thursday hit its highest since 1996.

US Treasury Secretary Scott Bessent has remained proactive in containing rising borrowing costs.

Not only did he intervene to buy the yen to avoid officials in Tokyo selling US Treasury bonds, the Donald Trump administration official also expanded buybacks of 20- and 30-year debt.

However, these measures have proven mostly ineffective, as yields ⁠have continued to climb.

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On September 1, the yield on Japan’s 10-year government bond touched 3% for the first time since 1996, while the five-year hit a record 2.26%. In the United States, the 10-year Treasury yield climbed to about 4.81%, its highest since November 2023, and the 30-year sat near 5.3%, a level last seen roughly 19 years ago.

British 10-year gilts pushed above 5.2%, the highest since June 2008. German bunds, the euro area benchmark, reached 3.375%, their highest since 2011. France’s 10-year OAT rose above 4.21%, last seen in November 2008.

Spanish, Italian and Dutch yields hit multi-year highs the same day.

That is not a local accident. It is a synchronised repricing of the cost of money across the developed world, driven by three forces that have converged at the same moment.

An energy shock that will not fade
The first force is oil. Brent crude jumped about 5% on September 1 to near USD 95 a barrel, a six-week high, after American forces struck Iranian targets around the Strait of Hormuz following attacks on two tankers there.

It caps a year in which the US and Israeli war on Iran has repeatedly crippled a chokepoint that normally carries about a fifth of the world’s daily oil flows. Brent traded above USD 110 in March, and dated cargoes briefly cleared USD 140, the highest since 2008.

Energy prices sit at the front of every inflation forecast, and bond investors know it. The war has done something more damaging than push prices up once.

The effect is mechanical. A huge quantity of high-grade duration is being pushed into the same part of the curve where governments must fund themselves, just as central banks shrink their own holdings.

Sovereign issuers are now competing directly with Big Tech for the same buyers, and they are not obviously winning. Of 91 hyperscaler bonds issued in 2026 with comparable pricing data, 78 were trading at higher yields in late July than when they were sold.

Tariffs, and the hole they left behind
Tariff warfare has fed the rout from both directions. Through 2025 and early 2026 the American effective tariff rate climbed to nearly 17%, the highest since the early 1930s, and New York Fed research found that close to 90% of the cost fell on American firms and consumers.

That was imported inflation, and it hardened the price expectations now embedded in long yields.

Then, on February 20 2026, the Supreme Court ruled that the International Emergency Economic Powers Act does not authorise the president to impose tariffs, striking down the reciprocal duties.

The administration pivoted to Section 122 of the Trade Act of 1974 and to existing Section 232 and 301 powers, and the average effective rate fell to about 7.1% by June. But the ruling erased a large expected revenue stream and opened the door to refunds estimated at up to USD 175 billion.

A government that loses tariff income without cutting spending borrows the difference, and the bond market has priced exactly that.

Where equities feel it
Global equity indices have absorbed the move so far, but cracks are visible underneath.

The MSCI All Country World Index remains near a record, while the technology-heavy Nasdaq Composite is down almost 4% from its June high. The damage is showing up sector by sector rather than in the headline number.

Long-duration growth stocks are the most exposed, because a higher discount rate compresses the value of profits expected years out. That hits the same technology names now issuing the debt, creating a loop in which the AI trade raises the cost of the capital it depends on.

Utilities and real estate, the classic bond proxies, suffer directly. Investors who held them for income can now get a comparable return from government paper without taking equity risk.

Banks and insurers are the relative winners, because lenders earn a wider spread as the curve steepens and insurers earn more on the fixed income portfolios they must hold. Energy has been among the strongest performing sectors of 2026, for the obvious reason that the thing driving inflation is also driving its revenue.

Housing and consumer discretionary sit at the sharp end. Mortgage rates track the 10-year Treasury plus a risk premium and are at their highest since the summer of 2025, in economies where affordability is already the dominant political complaint. Traders widely regard 5% on the US 10-year as the point at which equity markets stop shrugging.

How governments are responding
On Augusts 19, the United States Treasury said it would at least double its long-dated buybacks, from USD 2 billion to at least USD 4 billion per operation, running from Seotember 9 to November 4, apart from targeting the 10 to 30-year sector, where a buyers’ strike had set in since late June. Yields fell, then erased the move within a day.

Secretary Scott Bessent has since called the figure a floor rather than a limit, and officials have signalled that the roughly USD 1 trillion Treasury General Account could fund larger operations.

Evercore ISI called the plan a weak form of Operation Twist, and JPMorgan warned that it does nothing about the structural problem while risking the Treasury’s reputation for predictable issuance.

Japan is moving the other way, by tightening. The Bank of Japan is expected to raise its policy rate to 1.25% in September, and the finance ministry has repeatedly trimmed super-long issuance to relieve the maturities where fiscal anxiety concentrates.

Tokyo and Washington intervened jointly in the yen in July, partly to reduce the risk that Japan sells US Treasuries to raise dollars.

The Federal Reserve meets on September 15 and 16 with markets pricing roughly a two-thirds chance of a rise, and the European Central Bank (ECB) faces similar pressure as euro area inflation runs above target on energy.

Emerging markets are absorbing the consequences without the tools to resist them. Indian government bonds fell for a fifth straight session on September 2, the benchmark closing near 6.98%, with traders pointing to 7.15% if American yields keep climbing.

India imports most of its crude, and the gap between Indian and US 10-year yields is near a multi-year low, weakening the case for foreign portfolio money to stay. Yields also rose from South Africa to South Korea and Poland.

Perspective
For all the alarm, this is not 2022. Global government bond yields have risen about 17 basis points on a rolling 20-day basis, against 62 at the peak of the last rout, and bonds have lost roughly 4.2% peak to trough this year rather than 23%.

The difference is that 2022 was a shock with a visible end, once central banks had done their work. This one has three engines running at once, and none of them switches off on its own.

The post IF Insights: Global bond rout deepens as war, debt and AI collide appeared first on International Finance.

“Despite the current yield level, which ⁠is high, ‌the auction outcome was not strong,” said Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management, while interacting with Reuters.

“That is because the market ⁠is concerned that the Bank of Japan (BOJ) is behind the curve in dealing with the risk of inflation, and it will have to raise the rate higher,” he added.

The 10-year bond yields climbed to ⁠a near three-decade high in the previous session, leading to the January 6 auction, as markets braced for further interest rate hikes by the BOJ. The central bank raised ‍its policy rate to 0.75% from 0.5% in December 2025, but the yen has struggled to regain ground as markets expect the pace of the BOJ’s rate hikes to remain slow.

A weaker yen, while lifting import costs and fuelling inflation, also reinforces analyst expectations of further interest rate hikes.

“Markets now expect the BOJ’s terminal rate to rise to about 1.7%, based on forward one-year overnight index swaps (OIS) two years ahead, which are pricing in roughly 1.6956%,” Inadome said.

The OIS, a rate for swapping the overnight call rate and a fixed interest rate, provides an effective ⁠way to monitor market perceptions about the BOJ’s monetary ‌policy.

“Yields on longer-dated bonds also rose, with the 20-year JGB yield edging up 1.5 bps to 3.06%. The 30-year JGB yield rose 2 bps ‌to 3.475%. The ⁠two-year JGB yield inched down 0.5 bp to 1.185%. The five-year yield was flat ⁠at 1.595%,” Reuters concluded.

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“Our investment in Bond´s 3D technology is a logical way to accelerate 3D printed PAEK/PEEK parts to market”, Jakob Sigurdsson, Victrex CEO explained. “We need to ensure that all the key elements, including material, process, and hardware are aligned to fulfill our goal of enabling our customers to manufacture 3D printed PAEK components for critical high-performance applications. We’re now at a stage where the technology is sufficiently developed to embark on exciting development programs.”

Bond´s technology is capable of printing complex, functional parts made of PEEK with excellent mechanical properties, including in the z-direction. This enables the additive manufacture of high strength, isotropic parts with properties comparable to conventional moulded or machined PEEK parts. Overcoming this challenge is recognised as one of the key elements to further maturing the use of the high-performing thermoplastics in AM. Victrex and Bond will initially focus their new collaboration on demonstrating the potential in the spine and the semiconductor segments. These will use commercially available products such as PEEK-OPTIMA™ from Invibio Biomaterial Solutions, Victrex’s medical business, or VICTREX™ PAEK thermoplastic. In the future, this ability to print functional parts from existing PEEK grades may also have value in aerospace, energy, automotive, manufacturing and engineering applications, where existing industry standards have been built around years of experience with Victrex’s commercial PEEK polymers.

Bridge the gap between prototyping and serious production environment

“We found that the market needs strong functional parts made from high-performance polymers that can be used not only for prototyping but for production. With our dedicated focus on 3D printing technology for high-performance polymers, we were able to develop a technology to achieve the full strength of existing PAEK and PEEK polymers. This includes the strength in the Z-direction, which is the most difficult to achieve with high-performance polymers in general and PEEK in particular,” commented Gerald Holtvlüwer, CEO, Bond High Performance 3D Technology. He continued, “We’re excited to partner with a world leader in PAEK polymer-based solutions. Victrex´s material know-how and their strong marketing and sales activities, are a perfect channel to market for us and a complement to our pioneering technology.”

Currently, Bond´s 3D hardware and software are in the beta-phase. A clear development plan is in place for upscaling and installing additional 3D printing machines later this year. This is expected to mark the next phase and drive the transition from development to first part qualification and early stage production. Bond was founded in 2014, delivered a ‘proof of concept’ 3D printer in 2016 and following investment in the same year then realized functional models and prototypes.

Establishing supply chain for additive manufactured PAEK parts

Sigurdsson summarised, “Collaboration and partnerships are the key to establishing the necessary supply chain for additive manufactured PAEK parts. After focussing, as part of Innovate UK projects, on new optimized PAEK/PEEK materials, partnering with Bond is the next important stage. Their advanced technical capabilities and ambitious, innovative culture will help to meet the needs of industries that can benefit from the exceptional material properties PAEK brings, in combination with the manufacturing benefits and freedom that their AM technology offers.”

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Bond yields in emerging East Asian markets fell between December 31 and mid-February despite the risk of accelerated pace of interest rate hikes in the United States (US), the Asia Bond Monitor of Asian Development Bank (ADB) said.

“Emerging East Asia’s improved growth outlook and strong fundamentals have buffeted the region from risks of possible capital outflows,” said Yasuyuki Sawada, Chief Economist, ADB. “Policies to improve the transparency of financial markets and encourage long-term investment can help countries face future external shocks.”

Amidst solid growth and rising inflation, investors across most of the region have shown increased confidence in emerging East Asian local currency (LCY) government bonds, leading to declining yields. Indonesia’s implementation of sound reforms led it to experience the largest decline in yields over the period. The People’s Republic of China (PRC), meanwhile, saw yields on 2-year and 10-year government bonds rise, as the government introduced new measures to protect against asset and credit risks.

All of the region’s currencies appreciated against the US dollar, except for the Hong Kong dollar and the Philippine peso. Equity markets also rose in the region.

Emerging East Asia’s outstanding local currency bonds reached $10.2 trillion by end-December, with growth moderating on both a quarter-on-quarter and year-on-year basis. Government bonds account for 64.6% of the regional total. The PRC remains the region’s largest bond market, with outstanding bonds standing at $7.1 trillion — or 70% of the region’s total.

The report highlights several risks for the region’s bond markets as the global economy recovers. These include the acceleration of rate hikes by the US Federal Reserve, uncertainty over policies in major developed economies, particularly the US and the eurozone, and the depreciation of the Chinese renminbi, which challenges growth prospects in Asia.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members—48 from the region.

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March 17, 2017: CAMRADATA, a leading provider of data and analysis for institutional investors, has published its latest investment research reports charting the performance of investments and asset managers in Q4 2016 across six asset classes, including Global Equity, Emerging Markets Equity, UK Equity, Diversified Growth Funds, Multi Sector Fixed Income and Emerging Markets Debt.

Over three years’ worth of data from CAMRADATA Live (its online data platform) at December 31, 2016 was analysed to produce the reports and some key investment trends emerged.

The fourth quarter saw bond valuations fall as inflationary expectations picked up and the increase in US interest rates put upward pressure on global yields.

However, most equity markets continued to perform well, particularly in the financial and energy related sectors, and the oil price recovered. US equities performed well over the quarter, with the S&P 500 Index returning 3.8%.

UK equities performed in a similar fashion, the FTSE All-Share Index returning 3.9% over the quarter, reaching an all-time high at the end of the year. European equities also performed strongly over the quarter, the FTSE World Europe (ExUK) Equity Index returning 6.0%.

Commenting on the data, Sean Thompson, Managing Director, CAMRADATA said, “US equities remained buoyant over the fourth quarter, despite uncertainty about the US presidential elections and Trump’s subsequent victory dominating the news agenda. UK and European equities all showed strong performance. In the UK, we saw that fears about the potential negative economic impact of the Britain’s decision to leave the EU have receded, with domestic growth rates exceeding expectations and consumer spending remaining resilient. However, sterling fluctuated over the period, falling sharply in early October after suggestions from the Prime Minister of a ‘hard Brexit’, but it recouped some of its losses after the Bank of England upgraded UK growth projections, and the High Court ruled parliamentary approval was required to start the EU exit process.”

Thompson points out that while Donald Trump’s proposals to boost fiscal spending were largely seen as a positive for the US economy, suggestions of increasingly protectionist trade policies have had a detrimental effect on some Emerging Markets.

Diversified growth funds

DGF products saw the lowest quarterly inflows of 2016 in Q4 2016, standing at £3.3bn across the universe. However, 2016 has the highest inflows overall for the last three years totalling £28.2bn.

Q4 2016 continued to see an increase in positive performance outcomes within the DGF universe, with nearly 68% of products achieving a breakeven or positive return.

Looking at the three-year spread of annualised returns; all bar one product achieved a breakeven or positive return. The lowest annualised return produced is -1.1% and the best performing product achieved 15.97%, giving a spread of around 17%pa between the top and bottom performer.

UK equities

Whilst the UK equity universe achieved positive return in Q4, the asset class continued to see outflows with £2.8bn having been withdrawn during the quarter. In fact, the last time the UK equity universe saw a positive net inflow was in Q1 2014.

Although the UK equity universe saw negative asset flows in Q4 2016, the range of quarterly returns saw just over 90% of products achieving a breakeven or positive. The lowest quarterly return produced is -4.24% and the best performing product achieved 12.34%, giving a spread of over 16.58% between the top and bottom performer in just one quarter.

The range of annualised returns for the 3 years to December 31, 2016 saw all products achieve a breakeven or positive return. The lowest annualised return for this period is 1.28% and the best performing product achieved 12.77%.

Global equities

The global equities report tells a different story. Despite growth and good returns, investors reduced their allocation in the market for the 6th quarter in a row, with outflows during Q4 totalling $1.6bn.

Q4 2016 saw a decrease in the number of managers producing a breakeven or positive return with just fewer than 50% of products achieving this; this is down from 97% in Q3 2016. The lowest return produced is -9.12% and the best performing product achieved is 11.67%.

In comparison, looking at the three-year period, 94% of managers achieved a breakeven or positive annualised return, with the range of annualised returns starting from -9.2% and the best performing product achieved 12.32%.

Emerging market equities

Q4 2016 witnessed a largely negative range of returns in the emerging market equity universe with less than 5% of managers achieving a breakeven or positive return.

Moreover, when looking over a three-year period, only 29% of managers achieved a breakeven or positive return in this asset class. The lowest return achieved was -6.93% and the highest was 15.3%, highlighting the importance of the asset manager selection process in this asset class.

Multi-sector fixed income

The Multi Sector Fixed Income (MSFI) market continued to post positive results. The Assets under Management (AuM) in the MSFI Absolute Return universe sits at just under £76bn as at December 31, 2016. In Q4 2016, MSFI Absolute Return products achieved positive inflows of just under £2.3bn across the universe.

For the second quarter running, Western Asset Management had the largest asset inflows totalling £375m, in converted sterling. BlueBay Asset Management LLP achieved the largest percentage growth, seeing its assets increase by 29.69% over the same period.

In the MSFI market, nearly 77% of products achieved a breakeven or positive return in the fourth quarter. Whilst 97% of products achieved a breakeven or positive return over a three-year period, highlighting that the MSFI Absolute Return universe continues to show positive outcomes.

Emerging market debt

The emerging market debt products also experienced negative flows across the fourth quarter, with net outflows of just under £6.7bn across the universe. This made it the sixth quarter in a row that experienced negative flows. That said, there were some asset managers who saw inflows during the quarter.

Less than 5% of products achieved a breakeven or positive return in the EMD universe this quarter whereas nearly 70% of products achieved a breakeven or positive return over a three-year period.

The lowest return reached in Q4 2016 was -7.35% and the best performing product achieved10.19%, giving a spread of just over 17.69% between the top and bottom performer.

The range of annualised returns for the 3 years to December 31, 2016 in EMD is –6.2% to 10.37%, giving a spread of 16.57% between the top and bottom performer, which highlights the importance of the asset manager selection process in this asset class.

Sean Thompson concluded, “Our investment reports provide critical data and analysis on the latest investment trends. This information is vital given the continued volatility in the markets and the fact that markets are still adapting to the new political and economic landscape in the USA. In Europe, the Brexit negotiations and elections in the Netherlands, France and Germany will also have an impact on global markets.”

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Camille Paldi 

March 14, 2017: With proper regulation, legislation, and dispute resolution, Islamic finance, sukuk (Islamic bond) and takaful (Islamic insurance) have tremendous possibilities in the United States at this moment in time. Modes of Islamic finance, including musharakah, mudharabah, murabahah, tawarruq, salam, and istisna’a, can enhance the capitalist performance of the USA and help Americans compete with the rest of the world.

Sukuk or Islamic bonds may be utilised to gain capital for businesses, the state and federal government, and individual entrepreneurs. Islamic finance is gaining popularity around the world and it is time for the United States to tap into the global Islamic finance, sukuk, and takaful markets and compete on the global stage.

As of date, East Cameron Gas [$165,670,000 (2006)], General Electric [$500,000,000.00 (2014)], and Goldman-Sachs [$500,000,000.00 (2014)] have issued sukuk. The states of Illinois and New York have both tabled legislation allowing for sukuk transactions. Ernst and Young predicts that the sukuk market may reach $900 billion worldwide by 2019.

The sukuk instrument is growing in popularity around the world as an innovative financing instrument and a way to raise funds for various projects and business expansion, and increased competitiveness, which attracts ethical and creative investors worldwide. The UK recently announced that it is the first Western nation to issue a sukuk (£200 million). The USA should join the competition.

The topic of Islamic finance is being taught at Drake University, American University, Pebble Hills University, Harvard University and the University of Pennsylvania Wharton School of Business. All major US banks and law firms now have Islamic finance departments, usually with staff from overseas and/or located in other countries. There exists an opportunity now for Americans in Islamic finance.

This short article aims to briefly discuss the regulatory and legal aspects of Islamic finance, sukuk, and takaful in the United States.

In order for the sukuk business to thrive in the USA, each state should pass a law enabling sukuk transactions. Islamic finance and sukuk should be incorporated into federal commercial law. In addition, as each state regulates the insurance industry, each state should also pass a takaful or Islamic insurance law. Takaful should also be incorporated into federal insurance regulations and laws.

Furthermore, dispute resolution in the United States may need to be adjusted in order to accommodate Islamic finance, takaful and sukuk as well as sukuk bankruptcies. The East Cameron Gas sukuk bankruptcy was successfully settled through the US judicial system. However, additional adjustments may be necessary in order to successfully adjudicate Islamic finance transactions, including takaful and sukuk bankruptcies inside the United States.

In terms of the takaful business, the US has a state-regulated insurance system whereby each state determines its own licensing requirements for insurers. In order to obtain a licence, a company must demonstrate that it has the experience and management capability to run the company and show that it is financially sound. Insurers are also required to justify their premium rates. In addition, companies must fulfil the solvency requirements set by the state. Furthermore, there may be limits on the types and concentration of investments made with ‘held’ reserves. These issues should be addressed in the state and federal takaful laws.

The biggest challenge in introducing takaful, sukuk and Islamic finance in the US is the First Amendment of the US Constitution, which prohibits the making of any law respecting an establishment of religion or impeding the free exercise of religion as well as the Establishment Clause. In Murray v Geithner, a case was filed against the Federal government challenging the permissibility of bailout money provided to AIG under the Emergency Economic Stabilization Act (EESA) legislation saying it violated the Establishment Clause. The Act gives the Treasury the ability to purchase troubled assets from any institution.

In this case, EESA was used to purchase $40 billion in AIG shares. AIG conducts takaful business in Bahrain and the US. The plaintiff alleged that tax dollars were going towards the financing of Shari’ah products and activities.

The court found that the EESA legislation and the AIG bailout were created for a secular purpose and did not violate the First Amendment of the Constitution. Although there is a green light for Islamic finance in the USA, Islamic financial institutions may be at a disadvantage in possibly not being able to gain access to federal funds. Islamic institutions may also experience compliance issues as well as legal challenges. Islamic finance is currently offered by Devon Bank, University Bank, LARIBA, Whittier Bank and Guidance Residential all across the United States.

According to CNBC, Islamic banks’ capital grew from $200 billion in 2000 to close at $3 trillion in 2016. This figure is expected to grow to $4 trillion in the 2020s. There are now more than 300 Islamic banks and 250 Islamic mutual funds globally. Islamic finance constitutes approximately 5-6% of the global financial system, and growing. Ernst and Young predicts that Islamic finance will grow 19.7% annually through 2018.

At this point, there are 25 Islamic financial institutions operating in the USA with the top three being The American Islamic Finance House, University Bank’s subsidiary University Islamic Finance, and Harvard Islamic Finance Program. J P Morgan started Islamic banking in 2013. Standard Chartered conducts Islamic finance worldwide through its Islamic ‘Saadiq’. These banks are overseen by federal regulators, such as the Federal Reserve System, and must also comply with local regulations.

The Islamic bank LARIBA Bank of Whittier (CEO: Yahia Abdul Rahman), operating in California, has assets of $10.6 million and offers banking and home financing across the USA. Saturna Capital, an investment advisor and fund management company, manages more than $3.5 billion in assets, which are invested in Shari’ah compliant mutual funds.

The opportunity cost for the USA in not participating in this global market is quite large. On the other hand, the United States could introduce the rules and regulations required to engage in the worldwide Islamic finance, sukuk, and takaful business. Interest-free financing options may enhance the system currently in use in the United States and offers a chance for Americans to diversify their portfolios, attract global investors, enhance liquidity and compete in the global village.

Camille Paldi is CEO of the Franco-American Alliance for Islamic Finance (FAAIF)

The post Challenges for Islamic finance in the USA appeared first on International Finance.

“This transaction represents a record size for ADB in US dollars and garnered one of our largest-ever levels of subscription for a global benchmark issue allowing for pricing inside of the original guidance. So this is an extremely successful mid-curve outing for us post-Chinese New Year and affirmation from the investor community for our solid credit and mission,” said Pierre Van Peteghem, Treasurer, ADB.

The 5-year bond, with a coupon rate of 2.000% per annum payable semi-annually and a maturity date of February 16, 2022, was priced at 99.434% to yield 26.95 basis points over the 1.875% US Treasury notes due January 2022.

The transaction was lead-managed by Bank of America Merrill Lynch, HSBC, Morgan Stanley, and TD Securities. A syndicate group was also formed consisting of BMO Capital Markets, BNP Paribas, Citi, Daiwa Securities, DB, DBS Bank, ING, J.P. Morgan, Mizuho International and RBC Capital Markets.

The issue achieved wide primary market distribution with 32% of the bonds placed in Asia, 39% in Europe, Middle East, and Africa, and 29% in the Americas. By investor type, 44% of the bonds went to central banks and official institutions, 40% to banks, and 16% to fund managers and other types of investors.

ADB plans to raise around $25-30 billion from the capital markets in 2017.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members—48 from the region.

The post ADB plans to raise around $25-30 billion from the capital markets in 2017 appeared first on International Finance.

May 12, 2015: A £1billion infrastructure project that will link Battersea to the London Underground is another step closer due to a pioneering new method of financing agreed between the GLA and Lloyds Bank Commercial Banking. On May 11, they confirmed that the United Kingdom’s first ever Consumer Price Index-linked Sterling bond has been issued in a £200m deal that will contribute to the cost of the new Tube link.

The bond was developed by Lloyds Bank Commercial Banking and is a first in the Sterling bond market. It has enabled the GLA to raise finance in the most cost effective manner, and by taking this approach the Authority is expected to deliver the best possible value for Londoners by potentially saving up to £40m over the next 25 years.

An extension to the Northern Line is essential to the regeneration of Vauxhall, Nine Elms and Battersea and will lead to the creation of 24,000 jobs and 18,000 new homes.

Working with Lloyds Bank Capital Markets team, the GLA was able to hold a competitive dialogue with Sterling institutional investors and concluded that it was better value-for-money to issue bonds linked to CPI, rather than the traditional Retail Price Index.

The Mayor of London, Boris Johnson, said, “This deal demonstrates the continuing lure of London to investors with an eye for a world-leading transaction. These wise heads realise the incredible potential of our city and my team will draw on every possible source of funding in order to ensure the mega infrastructure projects we need to continue to thrive are able to move off the drawing board and into reality.”

James Garvey, Managing Director, Head of Capital Markets at Lloyds Bank Commercial Banking, said, “We are delighted to have led this milestone transaction for the GLA. The bond was structured to meet the financing requirements of the GLA drawing on demand from the growing volume of CPI-linked liabilities in the UK pension industry. In securing first mover advantage, the GLA has raised finance at a very competitive cost. This transaction is a great example of our Helping Britain Prosper plan in action, in which we have committed to support £30 billion of infrastructure projects in the National Infrastructure Plan by 2017.”

Tom Pearce, Managing Director at Rothesay Life, said, “Lending to high quality institutions such as GLA is core to Rothesay Life’s low risk asset strategy and we are delighted to have made this investment in London infrastructure.”

Securing funding through a cost effective bond issuance programme has become increasingly important to UK local authorities as they look at alternatives to the traditional funding route of the Public Works Loan Board (PWLB). This is the GLA’s second bond issuance via Lloyds Bank after an inaugural £600 million issuance in 2011 to part fund the CrossRail project.

The bond issue, which will pay the investor a CPI-linked coupon of 0.34%, is expected to save the GLA £40million over the next 25 years.

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The post London secures £200 mn for extension to Northern Line appeared first on International Finance.

Peter Taberner

February 4,2015: The fall in oil prices has left holders of high yield bonds floundering, as the value of their investments has simultaneously plummeted.

Over the past three months, data from the First Trust High Yield Bond reveals that there has been a drop in price of around $1, reaching a nadir of below $14 in the middle of December last year.

In a culture of global low interest rates, many investors have turned to high yield portfolios. The greater risk being mitigated, by the prospect of a more favourable return than more safer investments, such as government bonds.

Figures from Dealogic, a platform used by investment banks to optimise their portfolios, highlights the popularity of high yield bonds since the 2008 financial crash.

Globally, the deal value of high yield bonds reached $67.5 million in 2008, this accelerated massively to $479.1 million in 2013.

The amount of oil and gas high yield bond holders climbed from 9% of the total high yield bonds held seven years ago, to 13% in 2012.

Alarmingly for investors, this year the trend for bond redemptions in oil and gas leaves just 2% of high yield bonds currently entrusted in those energy markets.

Mike Ingham, a market strategist at BGC Partners, said: “The effects of the fall in oil prices have been seismic. At this point, there has been a comprehensive capitulation by investors in high yield energy, with positioning probably the lightest we have seen since the post dot.com recession, and spreads here are now double the broader high yield market.”

“The final quarter of 2014 was particularly brutal. As high yield energy bonds lost over 11%, bringing full-year losses on the sector of over 7%. These losses have been sufficient to significantly impact performance of the entire asset class.”

As a result, selling pressure started early in the second half of the year, and accelerated rapidly into the fourth quarter as oil fell further.

Ingham also believes that Exchange Traded Fund trackers would have almost certainly got the “wooden spoon” due to their inability to alleviate the energy fallout, through greater-than-benchmark returns from an active underweight.

While Europe has been affected by the high yield bond price falls, the market is still dominated by the US, with a global share of around 75%, according to BCG.

The largest owners of the bonds are high yield mutual funds, insurance companies and pension funds.

The energy sector of the Standard and Poor’s US Issued High Yield Corporate Bond Index is currently 14% of market value, and had been as high as 17.6% as recently as October 2014.

Looking to the future, Kevin Horan, director of Fixed Income Indices at S&P Dow Jones Indices, reflected: “Past history, though not an indicator of future events, has shown through the performance of indices, that some investments over time have reached a valuation level, more in keeping with the markets’ forward views. The duration of market cycles can be either short or long, and will impact the time to recovery of certain assets.”

Predictions on the longevity of falling oil prices range from months to years. High yield bond holders will be yearning for a reverse from current trends.

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