About a-team Marketing Services

A-Team Insight Blogs

Finance and Insurance Firms Turn to Third-Party Service Providers for Corporate Credit Valuations

Subscribe to our newsletter

Global banks, asset managers and insurance companies are adopting innovative approaches to valuing high-yield corporate credit in response to regulatory and client demand for transparent, defensible and timely evaluated pricing. Instruments under particular scrutiny include high-yield bonds, leveraged loans and collateralised loan obligations, all of which can be hard to price and all of which have their own idiosyncrasies in liquidity, transparency and pricing methodologies.

As regulations such as ASC 820/IFRS 13, Basel III, Solvency II and AIFMD come into effect over the next 12 months, requiring greater transparency in valuing illiquid cash and hard-to-price derivative instruments in fixed income portfolios, many firms are looking beyond in-house pricing processes to third-party, specialist valuation services that can offer independent and timely pricing based on relative value mark-to-model approaches.

A-Team Group has been working with Bloomberg to identify the difficulties of valuing high-yield corporate credit in an increasingly regulated market and to propose solutions to the problems. A White Paper authored by A-Team Group and sponsored by Bloomberg can be downloaded free here.

The paper describes the classification of all traded instruments into three levels depending on the amount of observable market data that is available to derive a valuation. In terms of corporate credit instruments, high-yield corporate bonds are generally the most transparent and straightforward to value. Leveraged loans are more difficult and are often valued on the basis of indicative market quotes from major dealers. The market for collateralised loan obligations is even more opaque, making them very difficult to value with any accuracy.

These instruments are prime targets for third-party specialist services, such as the Bloomberg Valuation Service, that can offer the transparency of market data inputs and pricing methodologies needed to defend valuations in response to queries from regulators, auditors and investors. Vendor services also have the scope to value a wide range of asset classes, expert teams to tackle hard-to-price instruments, sophisticated systems for timely delivery of valuations, and independence – elements of evaluated pricing that are becoming increasingly critical to regulatory compliance.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Are you making the most of the business-critical structured data stored in your mainframes?

Fewer than 30% of companies think that they can fully tap into their mainframe data even though complete, accurate and real-time data is key to business decision-making, compliance, modernisation and innovation. For many in financial markets, integrating data across the enterprise and making it available and actionable to everyone who needs it is extremely difficult....

BLOG

Bloomberg Debuts Real-Time Events Data Feed

Bloomberg has broken new ground with the release of its Real-time Events Data solution, which it says will help financial institutions make better decisions faster, based on the most accurate and timely information. The US financial data and technology behemoth has leveraged its real-time streaming API connectivity to provide subscribing clients with data from earnings...

EVENT

Data Management Summit New York City

Now in its 15th year the Data Management Summit NYC brings together the North American data management community to explore how data strategy is evolving to drive business outcomes and speed to market in changing times.

GUIDE

AI in Capital Markets: Practical Insight for a Transforming Industry – Free Handbook

AI is no longer on the horizon – it’s embedded in the infrastructure of modern capital markets. But separating real impact from inflated promises requires a grounded, practical understanding. The AI in Capital Markets Handbook 2025 provides exactly that. Designed for data-driven professionals across the trade life-cycle, compliance, infrastructure, and strategy, this handbook goes beyond...