EJF Investments Publish Shareholder Letter Commenting on Global Credit Markets and US Bank and Insurance Debt
LONDON--(BUSINESS WIRE)--Jan 10, 2019--EJF Investments Ltd. (LSE:EJFI), has published a letter to its shareholders, outlining some of the key drivers behind the tightening conditions witnessed in various credit markets, particularly the high yield and leveraged loan markets. In particular, this letter outlines how the debt of U.S. banks and insurance companies is far less fundamentally impacted by these developments.
In its view, while high yield and leveraged loan markets are entering a mature stage, some of the conditions driving this change such as a higher rate environment, are directly beneficial to many banks and insurance companies that EJFI is invested in. The full letter can be accessed through EJFI’s website and the following link: https://www.ejfi.com/media/1212/hy-and-loan-market.pdf.
Key points and findings are outlined below:Smaller U.S. banks and insurance companies are benefiting from peak capitalisation levels and lower balance sheet leverage. Meanwhile, the quality of leveraged loan covenants has weakened since the global financial crisis, and standards of underwriting in these markets have fallen. Small US banks and insurers remain cautious with respect to asset quality, with little to no exposure to high yield or leveraged loans. While higher interest rates are placing stress on borrowers and CLO markets, this movement increases the profitability of banks and insurance companies. Consequently, current concerns surrounding certain debt instruments, especially high yield and leveraged loans, have minimal fundamental correlation to small and medium bank and insurance issuers.
Alongside publishing key data behind the recent drop in investor sentiment in credit markets, EJFI have also outlined some of the core reasoning behind their current strategy. This includes analysis of credit quality across the banking industry, capitalisation levels in smaller U.S. banks, and average non-performing asset ratios for community banks.
About EJF Investments Ltd.
EJF Investments is a closed-ended investment company investing in assets benefitting from regulatory and structural change in the financial services sector.
The Company seeks to generate risk adjusted shareholder returns by investing in a diversified portfolio of long-term, cash-flow generating assets in two identified target investment areas, being (i) securitzation and related investments and (ii) specialty finance investments.
EJF Investments was the third highest performing investment trust in the UK in 2018, according to research from AJ Bell. 1
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CONTACT: EJF Investments
Peter Stage / Hammad Khan
+44 203 752 6775 / +44 203 752 6771Hanbury Strategy
Paul Stephenson / Kit Preston Bell
+44 7725 610 696 / +44 7805 497 922
KEYWORD: UNITED KINGDOM UNITED STATES EUROPE NORTH AMERICA
INDUSTRY KEYWORD: PROFESSIONAL SERVICES REIT BANKING FINANCE INSURANCE CONSTRUCTION & PROPERTY
SOURCE: EJF Investments Ltd.
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PUB: 01/10/2019 06:00 AM/DISC: 01/10/2019 06:00 AM