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Business Wire
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06/02/23 11:22 AM EDT
KBRA releases a new report on defeasance and supplemental debt, which climbed to an all-time high in 2022 for Freddie Mac K-Series deals. Despite the decline in activity in 2H 2022, defeasance may have benefited from lower Treasury prices due to the rise in the 10-year note, as the cost to replace property cash flows with defeasance Treasury securities became cheaper.
In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.
Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.
Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
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