Due to the current developments surrounding geopolitical tensions and rising uncertainties (e.g. the Iran conflict), I have stumbled across an exciting thesis:
What actually happens if government bond yields continue to rise significantly?
The direct effects are well known. Pressure on equities, problems with highly indebted companies, etc. But I find the question of the downstream profiteers much more exciting. When interest rates rise, a lot happens in the background:
- Companies have to refinance or restructure their debt
- Bond markets become more attractive again
- Trading volumes and volatility increase
In my opinion, the following companies, among others, could benefit from this in the medium term:
- $MCO (+0,88%) & $SPGI (+2,37%) = more bond issues means more rating requirements
- $$DB1 (+2,35%) = more trading volume in fixed income
- BlackRock = capital could flow back into bonds & bond ETFs
So it's not so much the interest rates themselves, but the activity around rising interest rates that is being monetized. My thought, perhaps there is currently an exciting investment case here with the companies that benefit from the subsequent movements.
What do you think? Do you think there are other "hidden beneficiaries" of rising bond yields? Or is this ultimately too indirect to derive a clear investment case?
~ No investment advice ~
