How to strike the right balance in high yield bonds
Strong 2016 performance and a sharp rally in credit spreads have prompted some investors to take a cautious view of high yield bonds.
The world’s gold miners will be running on the spot for years to come as a surge in gold prices prompts them to secure new production from less profitable projects, according to Bloomberg.
“In my mind, the industry is ex-growth,” said David Harquail, chief executive officer of Franco-Nevada Corp., the largest mine streaming and royalty company.
After a downturn that squeezed capital investments, most gold producers have no choice but to invest in new projects as existing mines are depleted. They’ll be faced with options that are, cumulatively, unlikely to boost global gold production or lower the sector’s overall costs.
“None of those projects are really great. They would have been built by now if they were,” said Harquail.
As a result, Harquail said Franco-Nevada plans to do more deals in the non-precious metals space, with a particular focus on oil and gas. The company’s mandate allows it to have as much as a fifth of its portfolio outside precious metals, and he would like to deploy capital to get to that level soon. Currently, 94% of Franco-Nevada’s holdings are in precious metals, he said. (Source: Bloomberg)
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