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Opportunities and Challenges for Hedge Funds in the Coming Era of Optimization
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Source: Markit
Assets on Loan – Billions
$940B
$900B
$920B
$1000B
$980B
$960B
2008
2009
2010
2011
2012
2013
Q1 2014
Q2 2014
-1%
$860B
$880B
$984B
$902B
$947B
$910B
$974B
Chart 17: Bond Assets on Loan
under the supplemental leverage ratio; and finally 4)
the focus on intrinsic value lending limiting interest in
GC trades. In 2010 and 2011, corporate bonds made
up only 50% of the lendable bond supply whereas
that total had risen to 55% in 2014 as lower value
government securities were withdrawn from lending
programs.
As noted earlier, the RMA estimates that average
spreads (as measured by the average weighted cash
spread above the risk-free rate and the average non-
cash premium) rose 18% across the aggregate set of
equities on loan between 2007 and 2013 (66 to 78
basis points). That similar measure for bonds fell by
47% (38 to 20 basis points). Put another way, in 2007,
bond loans were earning 58% of what an average
equity loans was making, but by 2013 that figure was
down to only 26%.
Source: Markit
Assets on Loan – Billions
Chart 16: Equity Assets on Loan
$483B
500B
400B
450B
$619B
$608B
650B
600B
550B
2008
2009
2010
2011
2012
2013
Q1 2014
Q2 2014
+26%