Andrew Hsu, a DoubleLine Portfolio Manager who trades and constructs portfolios from nearly all major sectors of the securitized asset universe, explains on The Sherman Show the basics of this market and its revisions in the wake of the present economic crisis. In response to the economic shock of the government-ordered COVID 19 lockdowns, as Mr. Hsu explains, the Federal Reserve implemented asset purchases and other measures which supported not only investment-grade corporate bonds but in some cases below-IG corporate securities. Fed support of securitized assets, aka structured product, has been limited to bonds rated AAA, whether in Agency mortgage-backed securities (Agency MBS), which by definition enjoy principal guarantees by the U.S. government, or private-label securitizations of credits such as auto loans, student loans, credit card receivables and other cash flows in addition to residential and commercial mortgages. Thus below AAA, especially in the mezzanine/high yield areas, of structured product, investors expect high loss severities and so buyers want significant discounts to par. This episode of The Sherman Show, hosted by DoubleLine’s Jeffrey Sherman and Samuel Lau, was recorded on April 16, 2020.
The views and opinions expressed herein are as of the date recorded and should not be construed as an offer to buy or sell any securities. Such views/opinions may differ from those of DoubleLine Capital or other of its affiliates and are subject to change without notice. DoubleLine has no obligation to provide any updates or changes. The following audio presentations represent DoubleLine’s intellectual property. No portion of these presentations may be published, reproduced, transmitted or rebroadcast in any media in any form without the express written permission of DoubleLine. DoubleLine has no obligation to provide any updates or changes. To receive permission from DoubleLine please contact email@example.com.
Neither DoubleLine nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefore (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed.
DoubleLine is not providing any financial, economic, legal, accounting or tax advice in these podcasts. The receipt of these podcasts by any listener is not to be taken as constituting the giving of investment advice by any DoubleLine entity or individual to that listener, nor to constitute such person a client of any DoubleLine entity. The portfolio risk management process includes an effort to monitor and manage risk, but does not imply low risk.