Tag: Rates

Why a $1.5 trillion source of corporate financing is choking on higher rates

  • CLO issuance down 41% in H1 vs same time last year
  • Funding lifeline for junk-rated borrowers shrinking
  • Investors demand higher premium

LONDON, July 5 (Reuters) – A financial stream that helped fund the world’s riskiest companies and grew into a market estimated at $1.5 trillion in the low interest rate years is drying up, as aggressive rate hikes bring tougher borrowing conditions and uncertainty.

The pace of issuance of so-called collateralised loan obligations (CLOs), which bundle loans of the weakest corporates and repackage them as bonds, has stalled.

Specialist asset managers minted CLOs worth more than half a trillion dollars in 2021, a year of heavy post-pandemic monetary stimulus. Almost $69 billion worth were launched or refinanced during the first half of this year, down 41% on the same period in 2022, JP Morgan data shows.

These vehicles, popular with hedge funds, insurers and asset managers when borrowing costs are low and investors hunt for yield, account for up to 60% of demand for the junk loans rated single B or below, according to S&P Global Ratings.

But the market has sputtered just as companies whose debt is considered a speculative investment face a mountain of refinancing needs in coming years.

The sharpest rise in global interest rates in decades, an anticipated global recession and fewer new CLOs to support junk rated borrowers potentially create a toxic cocktail of corporate distress.

“There haven’t been large credit losses yet, but the expectation is that bankruptcy rates [for corporate loans] will go up,” said Rob Shrekgast, a director at KopenTech, an electronic trading and analytics platform for CLOs.

The global CLO machine is slowing


CLOs have grown into a market worth about $1.5 trillion, KopenTech said.

Looking ahead, demand for the bonds issued by these vehicles will “decline meaningfully,” Bank

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Industries See Fall in Search Engine Advertising Conversion Rates

  • Companies use various channels to run their ad campaigns; one popular method is search advertising.
  • So, how do they know if their search ads are optimized to their maximum potential? One way to know is to stay updated about search advertising benchmarks.
  • WordStream recently conducted a study and came out with a few benchmarks for various industries.

Companies use various digital channels to run marketing and advertising campaigns, such as social media, search engines, and influencer marketing. One time-tested method they use to promote their business is search advertising, alternatively called pay-per-click (PPC). And if done correctly, it can generate an average of 200% ROI, according to GoogleOpens a new window .

But how can companies know that their search ads are optimized to their maximum potential and are performing well? One efficient way to do this is to stay updated about the search advertising benchmarks.

WordStream recently analyzed search advertisements across companies, industries, and search engines (primarily Google and Microsoft) to develop a few benchmarks. Here are a few insights from the study and tips to improve your campaign’s performance.

See more: 5 Best Practices To Elevate Your Product Content Across Search Engines

CTR Increased While Conversion Rates Declined for Most Industries

The following are a few major trends regarding the standard metrics of search advertising.

The click-through rate (CTR) increased year-on-year (y-o-y) for almost all industries. Only two industries – Business Services and Industrial and Commercial – saw a small decline in CTR. Regarding cost per click (CPC), 61% of industries witnessed a rise, while only 35% witnessed a decline. This may be possible as CPC increased throughout 2022, according to WordStream’s earlier dataOpens a new window . Regarding conversion rate (CVR), 91% of industries saw a y-o-y decrease. Finally, the cost per lead (CPL) increased

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