BERMUDA BAY FANNIE MAE FORECLOSURES PLUS

These non-agency MBS or private-label securities are not guaranteed by any government-sponsored enterprise.Īsset-Backed Securities (ABS): Bonds created from car payments, credit card payments or other loans. Non-Agency Mortgage-Backed Securities (MBS): Mortgage-backed securities issued by private entities like financial institutions. Stressed: Debt issued by quality companies that are facing short-term business complications where their bonds are trading at a significant discount to par.Īgency Mortgage-Backed Securities (MBS): Securities comprised of bundles of home loans issued by one of these three agencies: Government National Mortgage Association (known as GNMA or Ginnie Mae), Federal National Mortgage (FNMA or Fannie Mae), and Federal Home Loan Mortgage Corp. ĮM (Emerging Markets): Bonds issued by companies domiciled in emerging market countries.

BERMUDA BAY FANNIE MAE FORECLOSURES PLUS

High yield: Corporate bonds with a lower credit quality rating (below BBB- or Baa3) by established rating agencies.īank loans: Where commercial banks or other financial institutions lend specified sums of money to companies in exchange for repayment of the loan principal amount plus interest. Investment grade: Corporate bonds with a high-quality credit rating (BBB or higher) by established rating agencies. The largest securitized sectors are mortgage-backed securities and asset-backed securities. Securitized: When cash flows from various types of loans, such as car payments, credit card payments and mortgage payments, are bundled together and resold to investors as bonds. They are not traded on the public markets.Ĭorporate: Bonds issued by a corporation in order to raise financing for a variety of reasons such as for ongoing operations, mergers and acquisitions, or to expand business. Private credit: Privately originated or negotiated investments, comprised of potentially higher yielding, illiquid opportunities across a range of risk/return profiles. Public credit: Debt issued or traded on the public markets. To help you better understand the types of opportunities offered within credit, we’ve provided a brief overview of each category across the spectrum:

Private: ABS backed by private short-term consumer loans sourced from a non-bank lender.

Public: ABS backed by graduate student loans of high-quality borrowers.

Private transaction: Purchase a commercial real estate first mortgage lien on a single property, secured by a commercial building that has underlying equity in the building.

Public transaction: Purchase an MBS bond, secured by a portfolio of commercial real estate assets.

In this case, the buyer holds the individual loans directly, versus a bond backed by a pool of individual loans

Private transaction: Purchase a pool of individual residential loans from a mortgage lender.Public transaction: Purchase a non-agency RMBS bond, backed by a pool of residential home loans.Private transaction: Structure a term loan to major retailer that faces liquidity challenges.Public transaction: Purchase a new issue bond from a major retailer that has assets to use as collateral for issuing new debt into the marketplace.Here we provide examples of some public and private credit investments to give you a sense of what they look like in practice: Corporate credit example: The public and private credit markets are tightly knit, and it is important to understand both in order to better value opportunities across the spectrum. The visual below divides the types of credit investments into public credit (those that trade in public markets) and private credit (negotiated outside of the public markets), to help you get a sense of the scope of the market and possible investment opportunities.

Credit is much more than one type of bond or investment - it encompasses a spectrum of different categories, each with its own risk/return profile, across the public and private markets. 1 That’s a lot of opportunity for investors to tap into.īroadly, an allocation to credit can enhance return potential, boost diversification and provide income, which is why it’s so important to for investors to understand this rich opportunity set. Yet, credit is actually a major component of the bond markets, accounting for $13 trillion of the global fixed income universe.

When you think of “credit,” bonds may not be the first thing that springs to mind.

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