Taking high-yield bond research to the next high-tech level, KDP Advisors in Montpelier, Vt., has launched an interactive bond screening and sorting tool that allows users to slice and dice information to cut right to the information they need.
Users of the subscription-based online service have up to 15 sorting criteria, including return, risk and maturity, from which to drill down.
The cornerstone is the KDP default risk ranking, which is the firm's proprietary view of a company's risk of default. From the default risk ranking, KDP analysts come up with a yield requirement. Buy, sell and hold ratings then are given depending on whether the bonds are trading above, below or at the yield requirement.
In addition, subscribers can receive up to four e-mails: a daily report summary that lists reports and updates that KDP analysts posted that day; twice-daily market commentary; a price change summary issued each morning that lists bonds that have moved up or down more than one point; and a report release notification that alerts subscribers to new reports from KDP analysts.
KDP is not the only firm providing high-yield research, although KDP executives believe the tool's search abilities are superior. Competitors include GimmeCredit Publications Inc., New York, an independent corporate bond research firm; Creditsights, London, an independent research firm; and FridsonVision LLC, New York, run by well-known high-yield bond analyst Martin Fridson.
Kingman D. Penniman, president of KDP Investment Advisors said that even though some competitors are taking advantage of the growth of the high-yield bond market, "there's a lot of opportunity for independent research" because most consultants to pension funds, endowments and even high-net-worth individuals now recommend at least a 5% allocation in high-yield bonds and because traditional Wall Street firms are providing less and less coverage in this area.
"There's plenty of room for different third-party providers," he said.