Category: News

• bondIT’s Scorable Credit Upgrade & Downgrade Forecast indicates that aggregated downgrade risk has increased the most in the Household Goods Sector, moving from 16% to 29% over the past quarter.
• At 31%, the downgrade probability of corporate debt is greater in the Airlines sector than in any other industry
• The change in upgrade probability of corporate debt is either negative or neutral for 12 of the 14 sectors analysed; however, the upgrade potential in the Energy and Hotels, Resorts and Casinos sector has increased by 2% and 1% respectively
• bondIT’s predictive credit analytics, powered by machine learning and explainable-AI, analyses more than 250 data variables daily including solvency ratios, capital requirements, profitability, and efficiency ratios

London/Berlin/Israel, 1 November 2022 – The latest Scorable Credit Upgrade & Downgrade forecast from bondIT, a provider of credit analytics and next-gen fixed income technology, indicates that the probability of achieving a negative change to a credit rating has increased most within the Households Goods sector in the third quarter of 2022. The downgrade potential has increased by 13%, from 16% in Q2 to 29% in Q3.

Following Household Goods, Household Products – which includes hygiene, personal, beauty, home care, health, and nutrition brands – saw the second highest increase of aggregated downgrade risk to credit over in the past quarter. The downgrade probability of the sector’s corporate debt rose by 6%.

Aggregated risk has increased in the Airlines industry, by 2% quarter-on-quarter and by 5% since the start of 2022. The strength of the dollar has renewed pressure on the airline industry’s balance sheets, driving up costs, from fuel to the aircrafts themselves. With the downgrade potential now at 31%, it is the industry most at risk of being downgraded, followed by Travel & Tourism and Household Products at 30%.

David Curtis, Partner at bondIT, said: “Anticipating changes in credit risk and understanding market dynamics early is crucial in this volatile market environment. There is a real opportunity for bond investors now to take advantage of higher yields, but we also see a lot of risk in the market. High-quality data is paramount to understanding credit risk and to achieve optimal bond allocation. The challenge faced by many fixed income investors, in the face of increasing margin pressure and resource constraints, is how to translate huge amounts of raw data into useful intelligence. This is where AI offers real added value. In a competitive landscape, better data drives better performance and that’s where bondIT is able to really harness technology to create a lasting competitive advantage, improve productivity and efficiency for our clients.”

Against a challenging economic backdrop of rising interest rates, reduced consumer spending and high inflation, the Technology sector also faces headwinds. The downgrade probability is now 15%, an increase of 2% over the past quarter, and 4% since the start of the year. The downgrade probabilities in the Automotive and Biopharma industries have also increased by 3% and 2% respectively.

Aggregated risk in the Energy sector has, in comparison, reduced quarter-on-quarter in line with rising profits. After a -2% decline in upgrade potential between Q1 and Q2, there has been a 2% reversal in Q3. The upgrade probability for corporate bonds is now 23%.

bondIT’s credit analytics platform, Scorable, harnesses machine learning and explainable-AI to predict downgrade and upgrade probability of more than 3,000 rated corporate and financial issuers worldwide within a 12-month timeframe. The Rating Transition Model analyses more than 250 data variables daily including solvency ratios, capital requirements, profitability, and efficiency ratios. The platform provides actionable insights for investors, allowing them to monitor corporate bond ratings and spreads, and anticipate rating changes and investment opportunities, ahead of the market.

About bondIT

bondIT provides next generation front office investment technology. We combine Data Science, Explainable-AI (XAI) and Advanced Technologies with Fixed Income investment know-how to improve the performance, accuracy and efficiency of our clients’ investment processes and businesses. Our technology enables clients to efficiently build, analyze and rebalance investment portfolios, and achieve within minutes what previously took hours or days. Thanks to bondIT’s predictive credit analytics, investors can anticipate changes in corporate credit risk and capitalise on investment opportunities ahead of the market. The platform is highly flexible, being data agnostic and API or cloud based, and allows for the seamless onboarding of internal models as well as downstream connectivity to existing portfolio management and trading systems. bondIT adheres to the highest privacy and security standards and is SOC 2 certified by Ernst & Young. bondIT is privately owned and paving the way for financial institutions of all sizes to integrate the power of greater technology in their investment processes. For more information, please visit www.bonditglobal.com.

 

bondIT’s AI-driven Credit Analytics predicts that US will see most Rising Stars in the next year

Scorable, bondIT’s AI-driven Credit Analytics, indicates that 6.3% of corporate and financial issuers in Europe are at high or medium risk of becoming Falling Angels* in the next 12 months, compared to only 2.1% of US issuers. The analysis also shows that the US and Canada will see the highest number of Rising Stars** in the next 12 months, with more than 90 companies (7.0%) having a high or medium probability of transitioning from high-yield to investment-grade.

David Curtis, Partner at bondIT, said: “The economic outlook across the globe is increasingly bleak as sky-high inflation and rising interest rates dampen the outlook. Companies in Europe are disproportionately affected by supply shortages and mounting energy insecurity as Russia’s invasion of Ukraine continues. However, in spite of rising bond yields, there is opportunity for investors to generate strong returns – if they manage their exposures well. Anticipating directional credit changes early helps to effectively manage risk, discover new investment opportunities, and build portfolios that optimally balance risks and returns in this challenging environment.”

bondIT’s analysis looks at BBB- and BB+ rated issuers, which sit directly at the intersection of investment-grade and high-yield and are therefore most likely to become Falling Angels or Rising Stars. In addition, BBB and BB rated issuers with high rating transition probabilities were also included.

Scorable, bondIT’s credit analytics platform, harnesses machine learning and explainable-AI to predict downgrade and upgrade probability of nearly 3,000 rated corporate and financial issuers worldwide within a 12-month timeframe. The Rating Transition Model analyses more than 250 data variables daily including solvency ratios, capital requirements, profitability, and efficiency ratios.

* Companies at risk of becoming Falling Angels are issuers with (very) high downgrade probability, according to Scorable’s Rating Transition Model, and BBB- rating (high risk) or BBB rating (medium risk)

** Companies likely to become Rising Stars are issuers with (very) high upgrade probability, according to Scorable’s Rating Transition Model, and BB+ rating (high probability) or BB rating (medium probability)

 

• bondIT’s Scorable Credit Upgrade & Downgrade Forecast indicates that downgrade risk has increased by 7% in the Travel and Tourism sector, and by 3% for the Airline industry, in Q2 2022
• The Retail and Consumer Goods sectors also saw an average downgrade probability increase by 3% each
• The upgrade probability across all sectors has either stayed the same or decreased
• bondIT’s predictive credit analytics, powered by machine learning and explainable-AI, analyses more than 250 data variables daily including solvency ratios, capital requirements, profitability, and efficiency ratios

London/Berlin/Israel, 1 August 2022 – The latest Scorable Credit Upgrade & Downgrade forecast from bondIT, a provider of next-gen fixed income technology, indicates that the probability of achieving a negative change to a credit rating has increased most within the Travel and Tourism sector in the second quarter of 2022. The probability of sectors achieving a positive change has either stayed the same or decreased across all sectors.

Against a backdrop of rising fuel costs, staff constraints and strike action, the probability of a rating downgrade within the next 12 month is currently highest for credit issuers in the Travel and Tourism sector at 31%, followed by the Airline industry with 29%. For Hotels, Resorts, and Casinos – many of which will be impacted by the challenges facing holidaymakers – the downgrade probability has increased by 1% and the upgrade probability has also shrunk over the past quarter, from 21% to 19% (-2%).

Downgrade probabilities have also risen across the Consumer Goods and Retail sectors: the average downgrade potential in the Consumer Goods sector has increased by 3% in Q2 2022, from 12% to 15%, whilst the Retail sector downgrade probability has increased by the same amount, from 13% to 16%.

In addition to the rising downgrade risk, the upgrade probability has decreased across almost all sectors quarter-on-quarter, with the Consumer Goods sector seeing the biggest decrease in upgrade probability of -4%. Only the Aerospace & Defence and Banking sectors saw no change in their respective upgrade potential, which remained at 20% and 14% respectively.

“Stagflation is bad for bonds, particularly corporate bonds, delivering a one-two punch of higher interest rates and wider credit spreads to investors’ existing holdings. As the current strain of stagflation continues to infect various parts of the economy and financial markets, volatility is likely to remain high, so corporate bond investors will need to be hyper-vigilant to both risk and opportunity alike,” said David Curtis, Partner at bondIT. “Compared to the first quarter of this year, we’ve seen a notable increase in downgrade potential across a number of sectors. Amidst a more challenging environment with recessionary pressures impacting investor sentiment alongside an expected return of default cycles, the ability to anticipate critical rating changes ahead of the market has become a strategic imperative. Technology can significantly augment portfolio management and research processes so that investors can more easily manage risk, discover new investment opportunities, and build portfolios that optimally balance these risks and returns.”

 

 

bondIT’s credit analytics platform, Scorable, harnesses machine learning and explainable-AI to predict downgrade and upgrade probability of more than 3,000 rated corporate and financial issuers worldwide within a 12-month timeframe. The Rating Transition Model analyses more than 250 data variables daily including solvency ratios, capital requirements, profitability, and efficiency ratios. The platform provides actionable insights for investors, allowing them to monitor corporate bond ratings and spreads, and anticipate rating changes and investment opportunities, ahead of the market.

 

About bondIT

bondIT provides next generation front office investment technology. We combine Data Science, Explainable-AI (XAI) and Advanced Technologies with Fixed Income investment know-how to improve the performance, accuracy and efficiency of our clients’ investment processes and businesses. Our technology enables clients to efficiently build, analyze and rebalance investment portfolios, and achieve within minutes what previously took hours or days. Thanks to bondIT’s predictive credit analytics, investors can anticipate changes in corporate credit risk and capitalise on investment opportunities ahead of the market. The platform is highly flexible, being data agnostic and API or cloud based, and allows for the seamless onboarding of internal models as well as downstream connectivity to existing portfolio management and trading systems. bondIT is privately owned and paving the way for financial institutions of all sizes to integrate the power of greater technology in their investment processes. For more information, please visit www.bonditglobal.com.

• bondIT’s Scorable Credit Upgrade & Downgrade Forecast indicates that upgrade probability across the Aerospace & Defence sector has increased by 7% in Q1 2022 1
• Upgrade probability across the Energy and Travel & Tourism sectors has also increased by 5% and 4% respectively over the first three months of 2022 2
• The Automotive and Consumer Goods sectors see biggest rise in downgrade probability – 3% each 3
• bondIT’s predictive credit analytics, powered by machine learning and explainable-AI, analyses more than 250 data variables daily including solvency ratios, capital requirements, profitability, and efficiency ratios

 

London/Berlin/Israel, 27 April 2022 – The latest Scorable Credit Upgrade & Downgrade Forecast from bondIT, a provider of next-gen fixed income technology, indicates that the probability of achieving a positive change to a credit rating has increased most in the Aerospace & Defence sector in the first quarter of 2022. Conversely, the risk of a downgrade has risen most in the Automotive and Consumer Goods sectors.

Across the Aerospace & Defence sector, credit issuers have, on average, a 21% probability today of achieving a rating upgrade within the next 12 months, versus 14% three months ago (+7%). Upgrade probabilities have also risen in the Energy sector, from 18% since the start of the year to 23% (+5%) at the end of March.

Similarly, in Travel & Tourism, the average probability for an upgrade has increased by +4% (from 11% to 15%) over the past three months. However, credit issuers in the sector are becoming more polarised into winners and losers from a credit risk perspective, as the average risk of downgrades has also increased by 1% and Travel & Tourism companies are still those which, on average, carry the highest probability of a rating downgrade (25% today versus 24% three months ago).

The average downgrade probability for the Automotive sector has increased by 3% in Q1 2022, from 11% to 14%, whilst the Consumer Goods sector downgrade probability has increased by the same amount, from 8% to 11%.

bondIT’s predictive credit analytics platform, Scorable, harnesses machine learning and explainable-AI to analyse more than 250 data variables daily including solvency ratios, capital requirements, profitability, and efficiency ratios. The platform provides actionable insights for investors, allowing them to monitor corporate bond ratings and spreads, and anticipate rating changes and investment opportunities, ahead of the market.

 

Aerospace & Defence, Energy and Travel & Tourism Sectors – Upgrade Probability Over Q1 2022

 

Automotive and Consumer Goods Sectors – Downgrade Probability Over Q1 2022

 

Dr. David Curtis, Head of Global Client Business for bondIT, said: “Against the backdrop of the market volatility created by inflation, the war in Ukraine, central banks weaning markets off stimulus, and a cost of living crisis in many global economies, our predictive credit analytics show a highly changeable environment for credit investors. These macro issues have meant that, in some sectors, the probability of a credit upgrade or downgrade is materially different to three months ago. Moreover, the picture is not uniform within sectors – the average probability for an upgrade has risen in Travel & Tourism but so has the average probability of a downgrade. In other words, companies’ fortunes are no longer simply rising or falling with the macro tide but are becoming increasingly polarised. This, in theory, should be a period where active fund managers can demonstrate significant value through their security selection.”

 

About bondIT

bondIT provides next generation front office investment technology. We combine Data Science, Explainable-AI (XAI) and Advanced Technologies with Fixed Income investment know-how to improve the performance, accuracy and efficiency of our clients’ investment processes and businesses. Our technology enables clients to efficiently build, analyze and rebalance investment portfolios, and achieve within minutes what previously took hours or days. Thanks to bondIT’s predictive credit analytics, investors can anticipate changes in corporate credit risk and capitalise on investment opportunities ahead of the market. The platform is highly flexible, being data agnostic and API or cloud based, and allows for the seamless onboarding of internal models as well as downstream connectivity to existing portfolio management and trading systems. bondIT is privately owned and paving the way for financial institutions of all sizes to integrate the power of greater technology in their investment processes. For more information, please visit www.bonditglobal.com.

bondIT’s Scorable continues the expansion of its analytical universe with the addition of nearly 400 of the largest financial issuers in the global debt markets. Scorable’s Explainable-AI now predicts changes in the credit risk profiles and rating transition probabilities of banks and financial service providers across the US, Europe, Asia-Pacific and Emerging Markets.

To determine issuer-specific risk profiles, our purpose-built financial model analyses more than 250 data variables daily including solvency ratios, capital requirements, profitability and efficiency ratios.

Looking at credit risk across all rating classes, 18% of banks and financial service providers currently show a high probability of a rating upgrade and 14% are at significant risk of downgrade in the next 12 months. However, Falling Angels are likely to outnumber Rising Stars: our Scorable Rating Transition model currently indicates a high downgrade probability for 15 BBB or BBB- rated financial issuers, whereas 9 issuers with BB or BB+ rating are likely to be upgraded in the coming year.

Scorable’s latest universe expansion brings the total number of corporate and financial issuers analyzed to more than 3,300 worldwide.

MEAG adopts BondIT’s Explainable-AI Technology to accelerate digitization of credit risk management

Munich/Berlin/Israel, 14 December 2021 – MEAG and BondIT, a provider of next-gen fixed income technology, are collaborating to digitize MEAG’s credit risk workflows. The asset manager will use BondIT’s Scorable Credit Analytics to improve its credit research process. Scorable leverages Machine Learning and Explainable-AI (XAI) to predict changes in the credit risk profiles and rating transition probabilities of more than 3,000 corporate and financial issuers worldwide.

“Working with BondIT is another important step in driving technological progress across our organization. We aim to continuously increase the quality and efficiency of our investment process, and technology plays a crucial part in this”, says Prashant Sharma, CIO Public Markets at MEAG.

Heiderose Briem, Head of Business Management: “We opted for Scorable because of its innovative technology, its transparent non-biased AI approach and the easy implementation to get an additional opinion to the inhouse model.”

MEAG’s Global Credit Research Teams in Munich and New York will use Scorable to broaden their research capacity and to improve their decisions in analyzing and managing their credit exposures through today’s volatile market environments. Recognizing and understanding market dynamics early on is crucial for MEAG’s investment performance.

“Better data drives better performance but translating the ever-growing amount of raw data into actionable insights can put a huge strain on resources. This is where our Explainable-AI can offer real added value in supporting analysts and asset managers in their investment decision-making”, says Oliver Kroll, Co-Founder Scorable & BondIT Head of Europe. “We look forward to working with MEAG and to helping them optimize their credit risk management”.

Scorable Credit Analytics is part of BondIT’s fixed income technology solutions portfolio. As a highly client-led organization, BondIT collaborates closely with its partners to help them leverage and analyze their data.

Scorable analyzes more than 250 data variables daily and translates raw data from a vast array of sources, including financial statements, fundamentals and capital market data into actionable insights for investors, helping them identify investment opportunities and risks ahead of the market. Unlike obscure black-box solutions, Scorable’s XAI approach supports transparency and allows users to understand the drivers behind the risk assessments. Scorable’s advanced technology and models are continuously enhanced and updated to reflect the latest market developments.

About BondIT
BondIT provides next generation front office investment technology. We combine Data Science, Explainable-AI (XAI) and Advanced Technologies with Fixed Income investment know-how to improve the performance, accuracy and efficiency of our clients’ investment processes and businesses. Our technology enables clients to efficiently build, analyze and rebalance investment portfolios, and achieve within minutes what previously took hours or days. Thanks to BondIT’s predictive credit analytics, investors can anticipate changes in corporate credit risk and capitalise on investment opportunities ahead of the market. The platform is highly flexible, being data agnostic and API or cloud based, and allows for the seamless onboarding of internal models as well as downstream connectivity to existing portfolio management and trading systems. BondIT is privately owned and paving the way for financial institutions of all sizes to integrate the power of greater technology in their investment processes. For more information, please visit www.bonditglobal.com.

About MEAG
MEAG is the asset manager of Munich Re and ERGO. With offices in Europe, Asia and North America, it also offers its extensive know-how to institutional investors and private clients from outside Munich Re Group. MEAG currently manages assets to the value of around €339 billion, €65 billion of which for institutional investors and private clients from outside the company group.

Appointment accelerates FinTech BondIT’s growth plans to serve asset managers’ and asset owners’ growing technology needs through portfolio management & research-as-a-service.

Herzliya, Israel & London, UK 1 June 2021 – BondIT, a market leading provider of next generation asset and wealth management technology, has appointed Dr David Curtis as Partner and Head of Global Client Business. In this position, Curtis will spearhead BondIT’s client expansion globally to meet the growing demand from asset managers, advisors and asset owners for technology which generates greater speed, increased accuracy and lower cost in asset and risk management.

Curtis joins BondIT after 16 years at Goldman Sachs Asset Management, where he headed the firm’s UK Institutional Business. Prior to this, he was Head of UK Retail at Merrill Lynch Investment Managers (now BlackRock) after several years in Systematic Fixed Income, FX, Derivative and Commodity Trading at Dresdner Kleinwort Benson.

BondIT’s fully integrated portfolio management and research-as-a-service solution enables portfolio managers, advisors and asset owners to automate and optimise fixed-income research, portfolio construction and management. It empowers asset managers to create, analyse and rebalance investment portfolios in real time, leveraging AI and utilising machine learning to accurately anticipate changes in credit risk and find investment opportunities ahead of the market.

Etai Ravid, CEO of BondIT said: “David’s experience and in-depth understanding of the asset management industry will be invaluable as we support our clients’ increasing technology needs with the integration of greater digitisation into their investment processes. David’s appointment adds to our highly skilled technology and client teams in Israel, the US, Germany and Australia, and strengthens BondIT’s capabilities to serve our clients globally.”

David Curtis, Partner and Head of Global Client Business at BondIT, added: “Having worked in asset management and capital markets throughout my career, I see an exponential need for asset managers to innovate, differentiate and find efficiencies to counter the competition and margin pressures that they face. I’m excited to join BondIT at this important time to accelerate technology adoption across an industry that has lagged many others. There is huge potential for growth – the fixed income and credit markets alone represent a $100 trillion+ opportunity and the way in which risk is analysed often relies on fairly inefficient systems. In the UK, a key centre of the $89 trillion asset management industry, we have an incredibly exciting opportunity to develop rapidly over the coming years.”

BondIT is backed by a number of leading investment firms, including Fosun and Talanx, a major European insurance group whose brands include HDI and Hannover Re. Earlier this year, BondIT announced that it had been selected to participate in BNY Mellon’s Accelerator Program to create next generation technology for their advisory businesses.

About BondIT

BondIT Global provides next generation fixed income technology. Its scalable technology platform leverages machine learning and data science techniques, empowering asset managers and financial advisors to automate and optimise their fixed income portfolio construction, management and research. Thanks to the integration of Scorable’s credit research in 2020, investors can anticipate changes in corporate credit risk and capitalise on investment opportunities ahead of the market. The platform is highly flexible, being data agnostic and API or cloud based, and allows for the seamless onboarding of internal models as well as downstream connectivity to existing portfolio management and trading systems. BondIT is privately owned and paving the way for financial institutions of all sizes to integrate the power of greater technology in their investment processes. For more information, please visit www.bonditglobal.com.