What is the point of credit research? Is it to provide trading ideas to hedge funds or is it to let traditional investors know if the corporates backing the bonds in their portfolios are about to go bust? Sell-side research houses seem universally to have plumped for the former role, and have been moving away from maintenance research to anticipatory research for some time. But why have they done this? Is it because it is the right thing to do or simply because hedge funds trade more and are prepared to pay for ideas?
There is no doubt that...
