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Don founded Kamakura Corporation in April 1990 and currently serves as its chairman and chief executive officer where he focuses on enterprise wide risk management and modern credit risk technology. His primary financial consulting and research interests involve the practical application of leading edge financial theory to solve critical financial risk management problems. Don was elected to the 50 member RISK Magazine Hall of Fame in 2002 for his work at Kamakura. Read More

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Kamakura Corporation
2222 Kalakaua Avenue

Suite 1400
Honolulu HI 96815

Phone: 808.791.9888
Fax: 808.791.9898
info@kamakuraco.com

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Phone: 215.932.0312

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Phone: 647.405.0895
 
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Phone: +03.5778.7807

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The Coca-Cola Company (KO) ranks third on the list of the world’s most valuable brand names, after Apple Inc. (AAPL) and Microsoft (MSFT), according to a recent Forbes study. Because of its iconic retail brand, the company is widely held by retail investors and gets strongly positive reviews from analysts. Today’s study incorporates the Coca-Cola Company bond price data as of March 14, 2014 to get an institutional, bond market view of the company.  We analyze the potential risk and return to bondholders of the Coca-Cola Company using 119 trades on 13 bond issues and a trading volume of $55.4 million in today’s analysis.

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The latest implied forward rate forecast from Kamakura Corporation shows projected 10 year U.S. Treasury yields down 0.17% to 0.08% from last week while fixed rate mortgage yields are 0.03% to 0.11% higher.  Mortgage yields, determined by the Monday through Wednesday weekly survey of the Federal Home Loan Mortgage Corporation, lag Treasury movements simply because of the 3-day yield calculation used in the Primary Mortgage Market Survey ®. We also present three potential scenarios consistent with the implied forecast that represent alternative paths for interest rates.  These scenarios are consistent with a multi-factor rate model benchmarked in 52 years of U.S. history, discussed below.

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In a recent note we compared the market’s view of the capital strength of Bank of America Corporation (BAC), Citigroup Inc. (C), and JPMorgan Chase & Co. (JPM). In today’s note, we expand the analysis to a ranking of all deposit-taking financial institutions which had daily trading volume of $1,000,000 or more in any bond issue on March 12, 2014.  We do not include institutions for whom the primary source of funds is the capital markets, instead focusing on “banks” in the deposit-taking sense of the word. Canadian and Australian banks dominate the list.

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On March 10 in the U.S. bond market, there were 30,328 bond trades in 4,824 non-call fixed rate corporate bond issues representing $10,098,929,774 in notional principal.  Which 20 trades were the best trades of the day, and how do we decide the answer to that question?  Today, we answer those questions for bonds with maturities of 20 years or longer.

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Special disclosure by the author: The author spent two summers working under Wm. Mack Terry, head of the Financial Analysis and Planning Department, at Bank of America NT & SA in San Francisco nearly 40 years ago.  One of Mack’s key lessons, for both senior management and for me, was that the devil and the solution to a puzzle were both in the details.

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