Market Mechanics: Nuclear Energy, Green Bonds, and the Evolution of “Green”
A notable recent development in sovereign bond markets has been the inclusion of nuclear energy within certain green bond frameworks.
Insights
Market Mechanics: Canadian Provinces, Pre-funding, and the quiet flattening of ASW Curves
A recent feature of the Canadian rates market has been the steady flattening of asset swap (“ASW”) curves for the larger provincial issuers. This development is not a reflection of shifting macroeconomic expectations or changing credit fundamentals. Instead, it is being driven by funding mechanics, offshore issuance decisions, and sustained demand for highly rated spread […]
Market Mechanics: Cross-Currency Issuance – A Quiet Shift in Sovereign Funding
Our latest Ardea Market Mechanics breaks down how surging cross-currency issuance is reshaping USD, EUR and AUD markets by driving pricing distortions from scarce long-dated supply and foreign issuer flows, creating opportunities well before macro trends appear.
Solvency II and Derivatives – Part 4
The final paper in our series explores how derivative classification under Solvency II can significantly affect capital outcomes for relative value strategies.
Solvency II and Derivatives – Part 3
Continuing our short series exploring how Solvency II (SII) applies to the use of derivatives within a pure relative value investment strategy, this third paper looks closely at their use under the classification of risk-mitigation.
Positioning for Relative Value in a Risky Macro Environment
In today’s environment of macro uncertainty, the long-held assumption that government bonds are a risk-free asset is being challenged. As market dynamics shift and volatility becomes the norm, investors are rethinking the role of fixed income in portfolio construction.
Solvency II and Derivatives – Part 2
As a firm specialising in managing pure relative value strategies, where derivatives play a central role, we are keen to open the conversation around how these instruments can be used effectively and prudently within the constraints of Solvency II (SII) through a short series of papers. In this second paper, we look closely at the Prudent Person Principle and employing derivatives in the context of Efficient Portfolio Management (EPM).
Market Mechanics: The Greenium Puzzle
Sovereign green bonds are often assumed to trade richer than their conventional peers – a pricing effect known as the greenium.
Bonds Don’t Need to Be Negatively Correlated with Equities
Dr. Laura Ryan’s research challenges the belief that bonds must be negatively correlated with equities to reduce risk, showing instead that relative volatility matters more – even when correlation is positive.
Market Mechanics: Gilt Shock Exposes Systemic Fragility
Gilts were back in the market’s crosshairs this week, as a sudden repricing in UK government bonds reignited concerns around fiscal credibility and underscored the shifting structural risk profile of duration assets.