Fixed income

The Bonds Market

Investing in the bond market means choosing a market with a liquid value of over US$ 100 trillion (source: Bank for International Settlements, Quarterly Review, March 2014). 
The bond market offers numerous advantages:

  • Fixed maturity and coupon payments can provide a regular and predefined cash inflow;
  • Reduced volatility compared to other asset classes;
  • A wide range of possible investment characteristics, whether corporate or sovereign debts, currencies, maturities or levels of risk;
  • Ongoing and developing interest from international investors.

Key features

The global investment universe of issuers is closely monitored by a dedicated team ofmore than 20 experienced credit analysts. The universe encompasses not only sovereign and investment grade corporate issuers, but also high-yield names. In terms of regions, Société Générale Private Banking has developed  extensive coverage including emerging markets ie eastern Europe, the Middle East, Latin America and Asia. More than 500 credit issuers are analysed by the credit analysts. 

The fixed income investment approach incorporates both macro-economic and strategic views. 5 fixed income experts based in Paris, Luxembourg and Switzerland support the local investment teams in delivering specific advice and valuable management services:

  • Continuous and up to date views on Fixed Income markets;
  • Ongoing and developing interest from international investors;
  • Bond picking: fundamentals, relative value analysis, primary markets, credit default Curves, market liquidity, currencies & capital structure.

Potential risks associated

Bonds are subject to several risks and investors may lose the amount invested (partially or totally):

  • Credit risk: investors are exposed to the insolvency of the issuer
  • Market risk: the value of the product may be affected by changes in the market parameters, and the price and value of investments and the income derived from them can go down as well as up. It could be lower than the issue price.
  • Liquidity risk: difficulty to sell rapidly an asset without causing a significant movement in the price and with minimum loss of value, or impossibility to sell an asset. An illiquid asset is an asset which is not readily saleable due to uncertainty about its value or the lack of a market in which it is regularly traded.
  • Volatility risk: these securities are volatile instruments and are likely to increase or decrease in value more often and to a greater extent than one that is not volatile.