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☆ Private credit may offer high yields, but investors should tread carefully. What to know
▼ + stars: | 2024-02-29 | by ( Michelle Fox | ) www.cnbc.com time to read: +8 min

Private credit has become a hot investment on Wall Street as institutional investors seek out alternative investments with attractive dividends. "Investors might consider allocating a portion of their portfolio to private credit, depending on their individual risk tolerance, investment horizon and financial goals." Private credit funds have yields generally in the low-teens, although it can vary, he said. In a February report on U.S. life insurance ratings, Fitch Ratings said, "elevated private credit borrower leverage and a relative deterioration in private credit terms and conditions during more competitive lending environments are adding to pressures in the credit quality of private credit assets." The majority of the portfolio is in direct lending private credit, but a portion is also in publicly-traded securities of larger corporate issuers.

Persons: SoFi, Vivek Paul, Paul, Goldman, Greg Olafson, David Solomon, Fitch, Lisa Kwasnowski, Blackstone, Kwasnowski, Chuck Failla, it's, Failla, Oppenheimer, Mitchel Penn, Penn, Ares Capital, They've Organizations: Street, Franklin BSP Private Credit Fund, CNBC, Wall, BlackRock, Research, Management, UBS, Blackstone Private Credit Fund, Sovereign Financial Group, Securities and Exchange Commission, Owl, Golub, Ares, Sixth, SEC Locations: DBRS Morningstar's

☆ VIEW Bank of England raises rates for a 14th time
▼ + stars: | 2023-08-03 | by ( ) www.reuters.com time to read: +7 min

The BoE raised interest rates by 25 basis points to 5.25% and said high inflation meant it was unlikely to stop raising rates any time soon. However, with Thursday's decision, traders began to price in a lower peak in UK rates. MONEY MARKETS: Interest-rate derivatives showed traders believe UK rates will peak around 5.67% by March, compared with an expected peak of 5.73% in the run-up to the decision. Rising interest rates means higher borrowing costs, which will lead to larger monthly mortgage payments for many homeowners." The Bank of England remains committed to bringing inflation down, unfortunately raising interest rates is one of the only tools the Bank can use to sap demand out of the economy."

Persons: BoE, Sterling, VIVEK PAUL, we’ll, STUART COLE, JEREMY BATSTONE, CARR, RAYMOND JAMES, MARCUS BROOKES, ” SEEMA SHAH, Rishi Sunak, GILES COGHLAN, THOMAS PUGH, JOHN LEIPER, Amanda Cooper, Samuel Indyk Organizations: Bank of England, FTSE, BLACKROCK, LONDON, TOM HOPKINS, Bank of, RSM, Bank, EMEA, Thomson Locations: LONDON, EUROPEAN, U.S

With some 1.6 million of those due to re-fix mostly 2-5 year fixed rate deals over the next 18 months - half of those by the end of this year - this super-hike will burn. Two-year fixed mortgage rates have doubled to 6% in just 10 months and were less than 1% two years ago. Fixed-rate deals were only introduced at all in 1989 and the vast majority were floating rates until just eight years ago. As Leaviss points out, five-year inflation expectations in the bond market are still stubbornly one percentage point above the 2% goal. In the end, the BoE has few good choices - but the days of fine tuning the economy with nudges and tweaks may be over.

Persons: BoE, that's, Moyeen, Jim Leaviss, Vivek Paul, Paul, Leaviss, Mike Dolan, Naomi Rovnick, Conor Humphries Organizations: Bank of England, National Institute of Economic, Social Research, Reuters Graphics Reuters, Reuters, Barclays, Bank, Investment, BlackRock Investment Institute, OECD, Twitter, Thomson Locations: United States, Germany

☆ Bank of England hikes rates by 25 basis points, no longer sees recession
▼ + stars: | 2023-05-11 | by ( Elliot Smith | ) www.cnbc.com time to read: +5 min

A passageway near the Bank of England (BOE) in the City of London, U.K., on Thursday, March 18, 2021. LONDON — The Bank of England on Thursday hiked interest rates by 25 basis points and revised its economic projections to now exclude the possibility of a U.K. recession this year. The Monetary Policy Committee voted 7-2 in favor of the quarter-point increase to take the main bank rate from 4.25% to 4.5%, as the bank reiterated its commitment to taming stubbornly high inflation. "In the context of resilient economic activity, we think there is a good chance of the Bank Rate peaking at 5% by the August meeting. "As rates moves deeper into restrictive territory and credit conditions tighten, a policy-induced recession becomes almost inevitable."

☆ Central banks are fighting a war on inflation. They're not done yet
▼ + stars: | 2023-01-31 | by ( Julia Horowitz | ) edition.cnn.com time to read: +6 min

London CNN —One of the main jobs of central banks is to keep prices under control, allowing households and businesses to plan for the future with some certainty on what things will cost. Tolga Akmen/EPA-EFE/ShutterstockPolicymakers face difficult questions about exactly when to pause interest rate hikes. The European Central Bank’s main rate is 2%, while the Bank of England’s is 3.5%. Still, investors are becoming increasingly confident that major central banks will change course soon. “Central banks are relatively close to the end,” Sels said.

While governments worldwide are grappling with high inflation and low growth, UK policymakers are still rebuilding fiscal and political credibility following the brief, chaotic premiership of Liz Truss. Worries about growth are leading some investors to limit their holdings of the pound and British debt. Reuters GraphicsForeign investors have traditionally been attracted by Britain's strong rule of law, stable governance and thriving financial and professional services sector. In the latest data, up to the second quarter of this year, FDI represented more than half the net outflow - a result of strong UK investment abroad but weak inward investment too. Stephen Welton, executive chairman of major growth capital investor BGF, said attracting foreign investment was like a global competitive sport - one that Britain had previously excelled at.

☆ VIEW Bank of England raises rates to 3.5%, says inflation has peaked
▼ + stars: | 2022-12-15 | by ( ) www.reuters.com time to read: +7 min

LONDON, Dec 15 (Reuters) - The Bank of England on Thursday raised interest rates by a widely expected 50 basis points (bps) to 3.50%, in its ninth straight increase - and its eighth this year. UK rates began rising in December 2021, making the BoE the first of the world's major central banks to kick off a monetary policy-tightening cycle. MONEY MARKETS: Interest rate swaps showed investors expected rates to peak at 4.46% by next August, compared with an anticipated terminal rate of 4.53% just before the decision. Their own numbers have been pointing to a recession for a little while, and they've still materially hiked interest rates. EDWARD HUTCHINGS, HEAD OF RATES, AVIVA INVESTORS, LONDON:"The Bank of England duly delivered on financial markets expectations of a 0.50% hike.

And for financial markets it begs the question as to whether the extent of the monetary or fiscal tightening currently assumed will ever actually happen. The OBR reckons UK consumer price inflation has now peaked and will back off to a full-year rate of 7.4% next year. But assuming standing market forecasts for energy prices and BoE rates, it then sees inflation fall below zero for eight quarters from the middle of 2024. The BoE also expects headline inflation to plummet into 2024 - and its 'fan chart' of the range of possible outcomes also has an outside chance of deflation then too. Delaying spending cuts until after an election won't help much in that regard if indeed they're seen necessary at all.

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