Staying Buoyant Floating Rate Securitized Products
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Investors flock to floating-rate assets during periods of rising interest rates for two primary reasons: they stand to benefit from increasing coupon payments as policy rates rise, and the assets’ minimal duration risk provides insulation during periods of volatility in long-duration assets. Judging by the $53 billion of inflows since the start of 2021, investors are often steered towards leveraged loans when it comes to floating-rate assets. Yet, for those seeking other approaches, high-quality securitized products provide the benefit of floating-rate assets as well as the opportunity to select high-quality, loss-remote assets amid moderating global growth.
